Export Import Business Learning Guide
If you are considering starting an export business in India, it’s important to have a good understanding of the basic mechanisms involved. Although export can be a profitable venture, it requires hard work and a natural business instinct to run it successfully. In this guide, we will discuss the key steps involved in starting an export-oriented business in India.
Step 1: Identify the Products and Commodity
The first and most crucial step in starting an export business is to identify the products and commodities that you would like to trade in. You should research and analyze the market demand, export potential, and regulatory requirements for your chosen product or commodity.
Step 2: Decide on the Nature of Trade
After identifying the products and commodities, you need to decide on the nature of the trade that you want to pursue. There are primarily three types of export companies in India, which are:
Merchant Exporters: These are businesses that procure goods from local suppliers and export them to foreign buyers. Merchant exporters do not manufacture the goods themselves, but act as intermediaries between the manufacturer and the foreign buyer.
Manufacturer Exporters: These are businesses that manufacture their own products and export them directly to foreign buyers.
Service Exporters: These are businesses that provide services such as software development, engineering, consultancy, and other services to foreign clients.
Step 3: Obtain Required Licenses and Registrations
To start an export business in India, you need to obtain the required licenses and registrations. Some of the key registrations and licenses include:
Import Export Code (IEC): This is a 10-digit code that is mandatory for any person or business that wants to engage in import or export of goods or services.
Registration with Export Promotion Councils: Export Promotion Councils (EPCs) are industry-specific organizations that promote and support exports of goods and services. Registering with EPCs can provide you with access to valuable information, training, and networking opportunities.
Goods and Services Tax (GST) Registration: All businesses engaged in the supply of goods or services in India with an annual turnover of more than INR 40 lakhs must register for GST.
Step 4: Arrange Finance
Export business involves significant upfront costs, including procurement of goods, transportation, and documentation. To finance your export business, you can approach banks, financial institutions, or seek funding from government schemes like the Export Credit Guarantee Corporation (ECGC).
Step 5: Establish Networks and Partnerships
Networking and partnerships are crucial for the success of your export business. You can establish partnerships with manufacturers, suppliers, shipping and logistics companies, and government agencies to streamline your export operations.
Starting an export business in India requires careful planning, research, and execution. Identifying the right product or commodity, deciding on the nature of trade, obtaining required licenses and registrations, arranging finance, and establishing networks and partnerships are crucial steps in starting an export-oriented business in India. With proper guidance and support, you can establish a successful export business and tap into the growing demand for Indian products and services in the global market.
There are several statutory formalities that must be completed when you have decided to setup this business.
Executing the compulsory registration process required for exports with various government and regulatory agencies and obtaining :
- GSTIN wef 1st July 2017, [Old-Sales Tax]
- Central Excise Registration
- Import Export Code – IEC
- REGISTRATION CUM MEMBERSHIP CERTIFICATE- RCMC
It is always beneficial as you tend to source goods from domestic suppliers for processing or trading. You can get 100% reclaims and refunds of applicable GST amount.
Import Export Code –IEC
Obtaining IEC from Director General of Foreign Trade (DGFT) is mandatory for companies and organizations aspiring to enter into export and import. You will be allotted a Business Identification Number – BIN, which is based on PAN issued by IT authorities. These both ID codes form the core of all export transaction documentation. This registration must be requested in prescribed format and must be accompanied with all mandatory supportings detailing all office locations and branches of the organization.
Registering Cum Membership Certificate
It is advisable for you to get membership of applicable export promotion council – EPC having jurisdiction over the commodity you are dealing in. In case you are dealing in a product that does have an umbrella EPC, you should approach an EPC controlling you main activity premise or Federation Of Indian Export Organization – FIEO. Incase of multiple commodities you can get register with FIEO. This registration entitles you various export linked incentives and facilities.
After all the registration formalities have been completed and the product line decided upon, you need to go out and start prospecting for potential markets and buyers for your productions and items. There are several sources that you can avail to make a foray into international markets. Various channels you can avail include
- Trade / Industrial directories
- Websites of Buyers
- Export Promotion Councils
- Foreign Embassies in India
- Indian Embassies Abroad