How to Start a Cloud Kitchen in India (2026): Licences, Setup Cost and Break-even

A cloud kitchen is a delivery-only restaurant: no dining room, no waiters, just a kitchen that cooks for orders coming in through Swiggy, Zomato, ONDC-linked apps and your own channels. It is one of the cheapest ways into the food business in India, but the margins are thin and the paperwork is real. This guide covers the licences you need in 2026, how GST actually works when a platform sells your food, what a realistic ₹ budget looks like, and how many orders a day you need before you stop losing money.

Quick answer

To start a cloud kitchen in India, rent a small commercial kitchen (200–400 sq ft is common), get FSSAI registration on FoSCoS, a municipal health/trade licence, a fire NOC where your state or building requires one, and Shop & Establishment registration, then list on Swiggy and Zomato. Platforms pay the 5% (no input tax credit) GST on your food orders under section 9(5); you register for GST once turnover crosses ₹20 lakh.

• FSSAI basic registration covers turnover up to ₹1.5 crore — fee ₹100/year

• Setup cost: roughly ₹5–20 lakh (industry estimates); our tier-2 example is about ₹9 lakh

• Aggregator commission is commonly 18–30% of order value, plus 18% GST on it (estimate, varies by contract)

• Break-even in our example: about 41 orders a day at a ₹350 average order

What a cloud kitchen is — and the three models to choose from

The term covers several set-ups, and the one you choose drives your budget.

• Single-brand kitchen — one menu, one brand, one kitchen. Cheapest to start and easiest to run well.
• Multi-brand kitchen — the same kitchen and staff run two to five virtual brands (say, biryani, rolls and desserts) so each listing ranks in a different category. Higher revenue per square foot, but more inventory and more menus to keep consistent.
• Shared or franchise kitchen — you rent a station in an aggregator-operated or private kitchen park, or take a franchise of an existing delivery brand. Less fit-out cost, but a revenue share or royalty on every order.

A home kitchen selling tiffins or cakes through Instagram is a food business too, and it needs at least FSSAI registration. Moving it onto Swiggy or Zomato at scale is a different matter: many municipalities will not issue a trade licence for commercial cooking in a flat, and most housing societies forbid it. Treat "cloud kitchen from home" as a test phase, not the plan.

Cloud kitchen numbers at a glance (2026)

₹100/year

FSSAI basic registration fee

Turnover up to ₹1.5 crore

5% (no input tax credit)

GST on food (restaurant service)

Paid by the platform on aggregator orders

18–30%

Typical aggregator commission

Estimate — negotiated per contract

₹5–20 lakh

Typical setup cost

Industry estimate, single brand

Licences and registrations you need

Most delays come from licences tied to the premises, so sort these out before you sign a long lease. A landlord's no-objection letter and the right building use (commercial, not residential) make every application easier.

FSSAI. Since 1 April 2026 a food business with turnover up to ₹1.5 crore needs only basic registration (Form A); above that, a state licence up to ₹50 crore. A cloud kitchen registers under the food-service kind of business at the kitchen's own address. Platforms will not activate your listing without the number. Full steps are in our FSSAI registration guide.

Health and trade licence. This is the municipal permission to run an eating establishment at that address. In Delhi, for example, it is the MCD Health Trade Licence for eating establishments, applied for online. Other cities use their own portals and fee schedules, and inspectors typically check drainage, ventilation and pest control.

Fire NOC. Rules differ by state and by building. A small kitchen with no seating often sits below the size limit, but some fire departments want a certificate for any commercial LPG installation. Ask your local fire station or the state single-window portal before you finalise the gas line.

GST for cloud kitchens: who pays what

This is where most cloud kitchen guides go wrong. Since 1 January 2022, restaurant services sold through an e-commerce operator are notified under section 9(5) of the CGST Act. CBIC's Circular 167/23/2021-GST confirms what that means in practice:

• The platform pays the GST on your food orders — 5% (no input tax credit) — and issues the customer invoice. You do not charge GST on those orders.
• No TCS is deducted from your payouts for those orders, because the platform is already paying the tax.
• Your platform sales still count in your aggregate turnover for the registration threshold.
• The platform must pay that tax in cash; it applies even if your kitchen is unregistered.

On orders you take directly — your website, a WhatsApp catalogue, phone orders or walk-in takeaway — you are the supplier. Once registered, you charge 5% (no input tax credit) on them and pay it yourself.

Registration. The rule that forces every online seller to register regardless of turnover (section 24) specifically excludes supplies taxed under section 9(5). So a kitchen selling only through aggregators registers when aggregate turnover crosses ₹20 lakh (₹10 lakh in special category states). Registration is free; see our GST registration guide.

The hidden cost: no input tax credit. Restaurant service at 5% (no input tax credit) comes without input tax credit, and since GST 2.0 standalone restaurants cannot opt for the 18%-with-credit route. The 18% GST that platforms charge on their commission and ad fees is therefore a real cost to you, not a recoverable credit. Build it into your menu prices.

Delivery fees. From 22 September 2025, local delivery services supplied through an e-commerce operator were also brought under section 9(5) at 18%. That mostly affects the delivery fee the customer pays, not your payout, but it is one reason customer-side fees have risen.

Income tax. Platforms also deduct TDS of 0.1% on the gross value of your sales (section 393 of the Income-tax Act, 2025, formerly section 194-O). Claim it against your tax when you file.

Composition scheme. Whether a kitchen under the GST composition scheme can sell through aggregators has been argued both ways since the 2022 change. If you plan to opt for composition, get written advice from a CA before you list on platforms.

How to start a cloud kitchen: step by step

From idea to first order

1. 1

   Pick a cuisine and a delivery radius

   Open Swiggy and Zomato for your target pin code and note which categories have few well-rated kitchens. Most aggregator orders are delivered within a few kilometres, so the location decides your customers.

   Tip: One tight menu of 15–25 items beats 80 items — fewer ingredients, less waste.

2. 2

   Lease a commercial kitchen

   Look for 200–400 sq ft with commercial use, water supply, drainage, a power load of at least a few kW and space for an exhaust duct. Get the landlord's NOC in writing.

3. 3

   Register the business

   A sole proprietorship is fastest. Open a current account, get Udyam registration (free) and check the brand name before printing packaging.

4. 4

   Apply for FSSAI, trade licence and fire NOC

   FSSAI on foscos.fssai.gov.in; the health/trade licence on your municipal portal; fire NOC where required.

   Open FoSCoS
5. 5

   Fit out the kitchen

   Commercial burners, exhaust hood, refrigeration, prep tables, sinks, a packaging station and a fire extinguisher. Second-hand equipment can cut costs substantially.

6. 6

   List on aggregators and set prices

   Sign up as a restaurant partner with your FSSAI number, PAN, bank account and menu. Price each dish only after working out cost, packaging and commission.

7. 7

   Launch and track daily numbers

   Orders per day, average order value, food cost percentage, rating and cancellation rate. Fix ratings first — they drive visibility.

Setup cost: a worked ₹ budget

There is no official figure for what a cloud kitchen costs. Published industry guides put a single-brand kitchen at roughly ₹5–20 lakh, with equipment alone ranging from ₹50,000 to ₹5 lakh. The budget below is our illustrative estimate for a 300 sq ft single-brand kitchen in a tier-2 city, built from those published ranges. Replace every line with real quotes from your city.

If you need finance, a Mudra loan covers equipment and working capital for micro businesses, and the startup cost calculator helps you build your own version of this table.

Aggregator commissions and what you keep per order

Swiggy and Zomato do not publish a single commission rate; it is negotiated in each restaurant's contract and depends on city, volume and whether the platform delivers. Industry write-ups in 2026 report independent restaurants paying roughly 22–30% per order, with large chains paying far less. Ads, discounts you fund, and 18% GST on all platform fees come on top.

Here is what a ₹350 order (menu price, before the platform adds GST) leaves you in our example:

• Menu price: ₹350 (average order value)
• Food cost at 32%: −₹112
• Packaging (containers, bag, cutlery): −₹20
• Commission at 25% (estimate): −₹87.50
• GST at 18% on that commission, not claimable as credit: −₹15.75
• Other payment and platform charges (estimate): −₹10
• Contribution per order: about ₹105

Two levers matter most: the commission rate you negotiate and your food cost percentage. Use the food cost calculator dish by dish before you set the menu.

Break-even: how many orders a day you need

Monthly fixed costs in the example: rent ₹35,000; one cook and two helpers ₹55,000; LPG, power and water ₹20,000; in-app ads ₹15,000; software, internet and sundries ₹5,000 — about ₹1,30,000. With roughly ₹105 contribution per order, break-even is 1,30,000 ÷ 105 ≈ 1,240 orders a month, or about 41 a day.

At 60 orders a day (1,800 a month), the kitchen makes about 1,800 × ₹105 − ₹1,30,000 ≈ ₹59,000 a month before the owner's salary, depreciation and income tax. At that rate the ₹9 lakh setup takes around 15 months to recover. Try your own numbers:

Try it — cloud kitchen break-even

Monthly Fixed CostsSelling Price per UnitVariable Cost per Unit

Contribution Margin / Unit₹105.00

Contribution Margin Ratio30%

Break-Even Revenue₹4,33,333.33

Break-Even Units1,239

Open the full Break Even Calculator (PDF, save, compare)

Adding a second brand from the same kitchen raises orders without adding much rent or staff, which is why multi-brand kitchens exist. Direct orders through your own channel skip the commission entirely, though you then pay GST yourself, run payments and arrange delivery.

Mistakes that sink new cloud kitchens

1. Pricing like a dine-in restaurant. If your menu price doesn't absorb 25–35% of platform costs, every order loses money.
2. Signing a lease before checking the trade licence. A residential or mixed-use building can make the municipal licence impossible.
3. Collecting GST on aggregator orders yourself. The platform pays it under section 9(5); charging it again creates a mismatch in your returns.
4. Treating GST on commission as a credit. At 5% (no input tax credit) without ITC, it is a cost.
5. One FSSAI number for two kitchens. Each premises needs its own registration.
6. Too many menu items. Large menus raise wastage and slow the kitchen, which hurts ratings and visibility.
7. Running ads before ratings settle. Paid visibility on a 3.6-star listing burns cash; fix taste, packaging and delivery time first.

Official links

• FoSCoS — FSSAI registration and licenceApply, pay fee, download certificate
• FSSAI order on revised turnover thresholds (13 March 2026)
• CBIC Circular 167/23/2021-GST — restaurant services through e-commerce operators
• GST Council 56th meeting recommendations (local delivery under s.9(5))
• GST registration portalFree registration
• MCD Health Trade Licence (Delhi example)

What to do next

Start with the paperwork that's tied to your address: confirm the trade licence is possible, then apply for FSSAI registration. Cost every dish with the food cost calculator, test your volumes with the break-even calculator, and plan your GST registration before turnover reaches the threshold. If you also want to sell packaged products online, read our guide to starting an ecommerce business.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

How much does it cost to start a cloud kitchen in India?

Published industry estimates put a single-brand cloud kitchen at roughly ₹5 lakh to ₹20 lakh, depending on city, size and whether equipment is new. Our worked example for a 300 sq ft kitchen in a tier-2 city comes to about ₹9 lakh, including a rent deposit, equipment, exhaust and plumbing work, branding and three months of working capital. Government fees are a small part of that.

Can I start a cloud kitchen from home?

You can start a home kitchen business with FSSAI basic registration, and many home bakers and tiffin services do. Scaling it as a full cloud kitchen on Swiggy or Zomato is harder: many municipalities will not issue a health or trade licence for commercial cooking in a residential unit, and housing society rules often prohibit it. Check with your municipal body before you invest in equipment.

What GST applies to a cloud kitchen?

Food from a cloud kitchen is a restaurant service taxed at 5% (no input tax credit). For orders through Swiggy, Zomato or another e-commerce operator, the platform pays that GST under section 9(5) of the CGST Act, not you. On direct orders — your own website, phone or walk-in takeaway — you charge and pay the GST yourself once registered.

Is GST registration mandatory for a cloud kitchen on Swiggy and Zomato?

Not automatically. The compulsory-registration rule for online sellers excludes supplies on which the platform pays tax under section 9(5), which covers restaurant services. You must register once aggregate turnover, including platform sales, crosses ₹20 lakh (₹10 lakh in special category states). Many kitchens register earlier because platforms and suppliers ask for a GSTIN.

What is a good profit margin for a cloud kitchen?

There is no official benchmark. In our worked example, a kitchen with ₹350 average orders keeps about ₹105 per order after food, packaging and commission, needs about 41 orders a day to break even, and earns about ₹59,000 a month before the owner's salary and tax at 60 orders a day. Commission and food cost move the result more than anything else.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 7 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Circular No. 167/23/2021-GST — GST on services supplied by restaurants through e-commerce operators — CBIC · accessed 7 October 2026
2. 2.Recommendations of the 56th meeting of the GST Council (3 September 2025) — GST Council / PIB · accessed 7 October 2026
3. 3.FSSAI order dated 13 March 2026 — revised turnover thresholds — FSSAI · accessed 7 October 2026
4. 4.Health Trade Licence — eating establishments (online application) — Municipal Corporation of Delhi · accessed 7 October 2026
5. 5.CBIC notifies changes for local delivery services via e-commerce platforms from 22 September 2025 — A2Z Taxcorp LLP · accessed 7 October 2026
6. 6.What Swiggy and Zomato really cost restaurants (2026) — DineHere · accessed 7 October 2026
7. 7.How to start a cloud kitchen in India: licences, costs and compliance — ComplifyXpert · accessed 7 October 2026
8. 8.TDS and TCS changes from 1 April 2026 — TaxGuru · accessed 7 October 2026