A corporation that offers its products and services to foreign nations is known as an export business. Goods or services that are exported from one nation to another are known as exports. On the other hand, importation involves bringing products and services into your nation from another. Well, In this blog we are going to provide a complete guide on how to start export business in India, so read the blog to the end.
Start An Import-Export Business
Establishing an import and export business company will increase your market share and earnings, but it’s important to have a solid business plan and choose the best export goods or services. Above all, you might wonder, how much capital is required in India to launch an export company. Starting a small business in India’s import and export industry usually costs between Rs 1,00,000 and Rs 3,00,000, depending on the nature and size of the enterprise.
The next question on your mind may be, “How do I know if my product is exportable?” So, based on what standards would you choose your export product? Here are some pointers:
- Discover unique, made-in-India products
- Research the market demand for these products and analyze their potential in international markets
- Choose a country with stable demand for these export products
- Trade regulations
Upon checking the aforementioned items, the subsequent course of action involves registering your export enterprise and keeping track of the required paperwork, including the Import Export Code (IEC), Registration cum Membership Certificate (RCMC), and Export Promotion Council Membership Certificate. You must also be aware of the steps involved in setting up an export firm in India.
Once you carefully follow the steps listed below on how to start export business in India, there shouldn’t be much to worry about:
Open A Bank Account
It is recommended that you create a current account with an Indian bank that is permitted to handle foreign exchange. After completing this, before your export endeavor can begin, you also need to officially form a sole proprietorship, partnership firm, or company.
Get a Permanent Account Number (PAN)
Every proprietor of an import or export business must get a PAN from the Income Tax Department. Go to the Tax Information Network website to begin your online PAN Card application.
Get an Importer-Exporter Code (IEC) Number
In compliance with the Foreign Trade Policy, the 10-digit IEC code is required for both imports and exports from India. Visit Import Export License – IEC Application Guide to find out more about the IEC application. To apply for the IEC, fill out the online application, pay the Rs. 500 application cost with a credit or debit card or net banking, and attach the required papers.
Registration Cum Membership Certificate (RCMC)
Export business owners need to obtain an RCMC from the Export Promotion Council in order to export. You can also ask for and get assistance with additional FTP 2015–20 benefits or concessions. The FTP 2015–20 strategy intends to increase exports of goods and services, job creation, and value addition in India by introducing two schemes: the Merchandise Exports from India Scheme (MEIS) and the Services Exports from India Scheme (SEIS).
Choose Your Product
All products can generally be exported without restriction, with the exception of some that are prohibited or restricted due to social, health, environmental, wildlife, and security concerns. These products include, but are not limited to, drugs, pornographic materials, counterfeit goods, and wildlife products.
Choose Your Market
After you’ve done your homework on the market’s size, competition, quality standards, and payment terms, choose an overseas market. As an exporting business, you might evaluate markets according to the available export subsidies. Obtain as much information as you can from export promotion organizations, Indian embassies overseas, and your network of friends, family, and coworkers.
Making relationships is one of the keys to success in the import and export industry. It is advisable, therefore, to find distributors who would purchase your products and resell them to other customers. Participating in trade exhibitions, buying exhibits, buyer-seller meetings, B2B portals, and online browsing are all recommended as effective means of finding buyers.
Foreign chambers of commerce, abroad Indian missions, and Export Promotion Councils (EPCs), government-instituted bodies that support and encourage export businesses through the exchange of technical and industrial information, are more beneficial resources.
Websites for commerce can serve as an electronic product catalog. Don’t forget to provide the product’s specifications, cost, terms of payment, lead times, shipping information, and any other pertinent facts. In addition to creating a website, you might think about listing your goods on B2B online markets like Alibaba.
Your buyer will probably ask for product samples before placing a definite order. While this is to be expected, it is imperative that you use premium raw materials to create the samples and that, after an order is placed, further goods are produced using the same quality materials. It is imperative for an export business owner to have knowledge of foreign government rules and procedures, as well as freight forwarding services.
Determine The Price/Cost
Pricing should be determined taking into account all costs from sampling to realizing export revenues and based on conditions of sale such as Free on Board (FOB), Cost, Insurance & Freight (CIF), and Cost & Freight (C&F), among others. When creating export costing, your objective should be to sell as much as you can for the best price, making the biggest profit margin.
How to Start Export Business in India?
Congratulations! An order has been placed and confirmed by an interested foreign customer! Now, the question is: what should come next?
Confirm order: Examine the items, details, terms of payment, packing, and delivery when you receive an export order before accepting it. As the foreign consumer and the owner of the export company, it can be beneficial to think about establishing an official contract.
Procure goods and quality control: You have to locate or produce the goods for export as soon as possible after the export order has been confirmed.
Remember – Your buyer has worked very hard to outperform the competition. Therefore, make sure that your products satisfy the needs of the customer. Superior quality is necessary to stay competitive in international markets.
Finance: If you successfully complete the export order and transaction, commercial banks will grant you pre- and post-shipment financing at discounted interest rates.
Labeling, packaging, packing, and marking: Subsequently, guarantee that the export items are accurately packed, labeled, and wrapped in compliance with the buyer’s specifications. Delivered goods in excellent packing will guarantee that your customers receive them in excellent shape. In a similar vein, well-packaged goods make handling and maximum loading easier, reduce transportation expenses, and guarantee cargo safety and quality.
Insurance: Items that are damaged can be quite expensive for your company. Marine insurance plans can help reduce this danger. For businesses engaged in import and export business, marine insurance is a need since it protects against monetary loss in the event that goods are lost or damaged during transit.
Delivery: Being on time is important in the import and export business industry. Observe the delivery timetable at all times. Planning is vital since nothing should be able to impede timely and efficient delivery.
Customs procedures: A PAN-based Business Identification Number (BIN) from Customs must be obtained before submitting a shipping bill for the clearance of export goods. In order to qualify for credit toward any drawback incentives, one needs to open a current account with the chosen bank and register as an authorized foreign exchange dealer.
The following are the required documents you must have before importing or exporting:
- Bill of Lading / Airway bill
- Invoice for goods plus packing list
- Shipping bill/ bill of export/bill of entry (for imports)
- Other documents such as a certificate of origin and inspection certificate may also be required.
Submit documents to the bank: All of the aforementioned documentation needs to be delivered to the bank within 21 days of shipment in order for it to forward them to the foreign bank and set up payment arrangements.
Opportunities for export business are growing, as are the options available to importers and customers, as the world grows increasingly interconnected on a daily basis. There are a lot of things to consider about how to start export business in India. Remember that entering the world of international trade can be difficult and that the export industry is highly complex.