Mandatory Licenses for Opening a Coffee Shop in India

Factors to Consider before Opening a Cafe

Coffee shops are all the rage in India right now. So, opening up a coffee shop – particularly in a big city – is a lucrative business opportunity, albeit one that involves some investment and risk. The question is, how can a café get a leg up over the competition? Read on to find out what steps you should take to make your café more successful than others:

• Location – Target areas with a large daily footfall such as busy shopping complexes, market plazas near colleges, schools, residential societies; and large malls in commercial areas

• USP – What is the café's USP? Why should customers pick your café over others? Draw out a business plan and think about what will make your café unique. For instance, theme-based cafeterias, or those housing books and board games, have grown in popularity in recent years. 

• Financing – The financing requirements and sources must be taken care of before you begin operations. Decide the budget and zero in on the cheapest source of finance 

• Marketing – In an age when both traditional and social media are saturated, a café – particularly a new one - needs a unique, out-of-the-box promotion plan to attract customers.

License and Registration Requirements

The Government of India has stepped in to regulate cafés, as they fall within the definition of commercial enterprises and a food business. As such, cafés have to comply with a number of rules and also need to obtain various registrations to operate legally. Here is a list of the required compliances:

Business registration

Depending on the legal nature of the business (sole proprietorship, partnership, LLP or company) a different registration needs to be obtained. For example, if the café is set up as a company, a company registration is required under the Companies Act, 2013. Smaller businesses may be registered as private limited companies or Limited liability partnership (LLP) which have limited government intervention.

FSSAI license

Since a café is a food business operator, it needs to obtain an FSSAI license. This ensures that the food and beverages on offer are safe, hygienic, and suitable for human consumption.

Health Trade license

The café must apply to the respective Municipal Corporation or Health Department of the state to obtain this license, failing which the café can be shut down. If all documents are in order, this license is generally issued within 60 days of application.

Eating house license

This license must be applied for at the nearest police headquarters. In major cities and metros, there is an option to apply online.

Insurance(s)

Cafés are required to apply for certain insurance policies such as fire policy, product liability, and public liability.

Fire security certificate

The café must obtain a No Objection Certificate (NOC) from the local fire department. This certificate is issued post inspection of the premises and installation of recommended fire extinguishers, etc.

License for playing music/video

Cafes which play music/video need to obtain a license under the Copyright Act, 1957. For this, an application may be made online on the website of the Phonographic Performance Limited or the Indian Performing Right Society

Trademark registration

While not mandatory, it is recommended for a café to obtain a trademark registration to protect its brand. Such registration is valid for 10 years.

GST registration

If the café posts an annual turnover exceeding Rs. 20 lakhs, it needs to obtain GST registration.

Shop and Establishment license

This license was introduced to protect the rights of the workers employed in shops. So, a café needs to obtain the Shop Act license if it employs workers like waiters, cashiers, cooks, etc.  

Need more details on the FSSAI license and what you need to start a coffee shop? Head over to LegalDocs! While you set up your café, we’ll handle all your license requirements.

All the Best!