Pigments from microorganisms are of growing interest as they are eco-friendly and are selected through evolution. Development of microbial derived pigments in food industry is increasing year after year and in view of high cost of current technology; there is a need to develop a low cost processes for the production of these pigments which could replace the synthetic pigments in industrial scale. Our work addresses the key aspects of 1) Examining the potential of cheap natural substrates for the production of pigments (mainly carotenoids and melanins), 2) Isolation of the pigment producing microbes from soil and water systems, 3) Extraction, purification, analysis and applications of the synthesized pigments, 4) Optimization of key process parameters for high yield pigments production. In our studies, an attempt was made to show the scope of utilization of cheaper substrates from domestic and agro-industrial wastes for large scale production of industrially significant pigments with limited processing or conditioning steps.