§1What this business is
You plant lemongrass slips (varieties Krishna and CKP-25) on leased upland, harvest the grass 4–5 times a year and steam-distil it in a stainless-steel unit to get lemongrass oil rich in citral. The oil is sold to soap, perfume, flavour and pharma makers and to essential-oil traders. One planting lasts a 4-year crop cycle.
Capacity: About 3,840 kg of oil a year from 8 ha (80 MT fresh herb per ha a year, 0.6% oil recovery, 480 kg oil per ha).
§2Is it right for you?
Who it is for
A farmer or farmer group with access to upland and labour, able to manage both the crop and the still.
Who it is not for
Someone without land access or who wants a factory-only business.
Advantages
- Lemongrass grows on poor, sloping land where other crops struggle
- One planting gives about 15 harvests over 4 years
- The oil stores well and is light to transport
- Steady industrial demand for citral
Drawbacks
- Needs 20 acres of leased land and field labour
- Oil prices swing with supply from other states and countries
- First harvest only after about 5 months
- Buyers test citral content; low-grade oil sells cheap
Skills you need
- Lemongrass agronomy and harvest timing
- Running a steam distillation unit
- Testing and storing oil
- Finding essential-oil buyers
Why difficulty 3/5: Combines farming and processing; success depends on land, labour and oil prices.
§3Market
Who buys
- Soap, toiletry and perfume makers
- Flavour and fragrance companies
- Pharmaceutical makers (pain balm, disinfectant, mosquito repellent)
- Essential-oil traders
How it sells
- Sale to essential-oil traders and aggregators
- Direct supply to industrial buyers
Good to know
- The report says commercial oil needs at least 70% citral; lemongrass oil typically has 75–90%.
- Citral is a base for beta-ionone, used for aroma chemicals and vitamin A.
§4Raw material & machinery
| Item | Qty | Cost |
|---|---|---|
| Hydro-steam distillation unit, lifting type, 1.0 MT per batch, SS-304 with accessories | 1 | ₹3.20 lakh |
| Distillation shed 25 ft × 16 ft × 15 ft (posts, CGI roof, brick floor) | 1 | ₹1.00 lakh |
| Water supply: 2,000-litre tank at 14 ft, bore well, 3 hp diesel pump, pipes | 1 set | ₹60,000 |
| Installation | 1 | ₹20,000 |
From: PMEGP sample project report — Lemon Grass Oil (prepared by Udyami/Samadhan)
- Lemongrass slips (Krishna, CKP-25)50,000 slips per ha at ₹0.40 each in the report; from registered or government nurseries
- Leased land₹12,000 per ha a year in the report
- FYM or compost1.5–2.0 t per acre at land preparation
From: PMEGP sample project report — Lemon Grass Oil (prepared by Udyami/Samadhan)
Suppliers in Building Business Bazaar
Fragrance & Flavour Development Centre (FFDC), Kannauj · Kannauj →MSME Technology Centre, Imphal · Imphal →
In our raw material database
§5Licences & registration
- Udyam registration
- GST
- Land lease agreement
- Boiler or still safety checks as required by your state
§6Schemes & subsidies
- PMEGPCentralActive15–35% subsidy
- CGTMSECentralActiveNo collateral, up to ₹10 crore
- Stand-Up IndiaCentralClosed₹10 lakh – ₹1 crore loan
PMEGP and CGTMSE fit the processing part; Stand-Up India for SC/ST or women founders. The report notes SHG members in a cluster may also take up the scheme.
§7Money
How the investment is worked out: Samadhan report: capital cost ₹5.00 L (distillation shed 25×16×15 ft ₹1.00 L, water supply with 2,000-litre tank, bore and 3 hp diesel pump ₹0.60 L, 1 MT/batch SS-304 distillation unit ₹3.20 L, installation ₹0.20 L) + working-capital margin ₹16.63 L (first-year cultivation and processing cost for 8 ha) = ₹21.63 L.
Working capital: Year 1 needs ₹16.63 L for land lease, planting material (50,000 slips per ha), weeding, harvesting and distillation at ₹120 per kg of oil; later years about ₹13.3 L.
Year not printed on the report — check current machinery prices.
§8Export potential
Confirm the HS code in the DGFT ITC(HS) lookup before you export
- Confirm the 8-digit ITC(HS) line with DGFT or your customs broker.
- You need an Import Export Code (IEC) from DGFT before the first shipment.
§9Risks — where people fail
- Oil price fall
- Poor rain or flooding on the field
- Low citral content
- Labour shortage at harvest
§1030 / 60 / 90-day plan
A general plan that applies to any business. A plan for this business will be added after research.
- Days 1–30: Visit a working lemongrass oil (cultivation and distillation) unit, ask 10 buyers about price and quantity, and get quotations from 3 suppliers.
- Days 31–60: Udyam and the licences you need (Udyam registration, GST), a project report (DPR), and the scheme or loan file.
- Days 61–90: Space and machines, trial production, and first deliveries to 10 customers.
§11Who to connect with
Associations, clusters and training institutes — the directory is being built. Connect
§12Watch
There is no episode on this business yet. Shows are coming soon on the Podcast page.
Want to start Lemongrass Oil (Cultivation and Distillation)?
DPR, loan file or registration — ask us on WhatsApp.
¶Sources
Data review: 6 October 2026. Spotted a mistake? Report it. For information only — not legal or financial advice.