Starting an export business in India is not easy. There would be thousands of questions such as legal guidelines to follow, documents required and much more raised in mind before starting the export business. The information related to this business is not so easily available on the internet as well. This article will help you with the entire necessary step-by-step guide that you must do before starting an export business in India. You will get the complete information from setting up the documentation to selecting the right buyers.
Read out the entire article and follow the steps given below before starting a new journey to export your products and get into the international market.
India's current government has launched the Make in India movement, which increased the export business by 9.98% in FY 2017-18. Your thought of starting an export business can be very profitable. Follow the below steps to start your new journey:
1. Set up a company
The first step to starting an export business is establishing an organisation that can be a proprietor or a partnership. Select an attractive and suitable name as well as the logo for your organisation.
2. Opening a current account
Next, you need to open a current account. Choose a bank that is authorised in foreign currency.
3. Get PAN (Permanent Account Number)
It is compulsory for every business person dealing in the international market to get a PAN from the IT department.
4. Apply for IEC number
A 10 digit import export code is a must, which can be issued from the Regional Authority of the Directorate General of Foreign Trade against the PAN. This number is mandatory for you to operate your business with the export of goods.
5. Get the RCMC issued
RCMC is mandatory for getting concessions under the Foreign Trade Policy 2015-20. Additionally, a Registration cum Membership Certificate provides you the access to guidance by the concerned Export Promotion Councils.
6. Product and market
Before you decide the products to export and the destination country where you want to export your products, ensure that the products are not mentioned in the restricted list of related authorities. The product and the market decision should be made only after getting a detailed understanding of the market size, export trends, competition in the market, and other related factors.
7. Finding buyers
Use mediums such as trade fairs, B2B portals, and meetings of buyers and sellers to know more about the prospective buyers. You can also seek help from other committees, such as the Indian Chamber of Commerce and Indian Mission Abroad.
Firstly, provide the customised samples for the demands to establish the authenticity of your brand.
Various expenses from the production to final marketing should be considered beforehand. Considering all the expenses, the best price should be quoted for the best quality product to generate the maximum profit. Also, be open to negotiations to make a success of the deal.
10. Cover risk through ECGC
The risk linked to international trading gets covered by Export Credit Guarantee Corporation Limited. The policies of ECGC provide cover against the buyers with no payments to the exporters.
Tips for a Successful Export Business in India
1. Products or services
While starting the export business, there are two options to select from: products, and services. You need to decide whether you want to go with the product based model or the model based on service.
2. Know legal documents required
It is crucial to understand the government's rules and regulations before you get into the export business. You should know the various documents required for the business, such as tax details, PAN card, business code, trademark registrations, etc.
3. Capital requirements
The exporter is not supposed to ignore the importance of capital, whether they want to initiate with a service-based business or product-based business. So, if anyone is thinking of starting an export business in India, they need to find satisfactory funding resources.
4. Online process
It is important to understand the importance of international customers in this business. So, you should focus on making your presence online and expand your business.
5. Prepared for the big loss
There are ups and downs in every business, so is the case with the export business. Thus, you should be ready to incur any loss in the business.
6. Professional help
Professional help is another factor that you can consider in the export business. It will help you reduce the risk that occurs with the start of a business. For example, you can hire an agent to pay the customs duty, or you can take professional help to decide the medium by which you can export your orders.
Products to Export from India
There are a large number of products that you can export through your trading business. You can check out the products and select the one that you find easy to get or manufacture. However, you need to check the product in the prohibition or restricted list of specific authority you are trading. The products are as follows:
- Petroleum products
- Pearls and precious stones
- Drugs and other biological
- Gold jewellery and other metal jewellery
- Steel and iron
- Organic chemicals
- Cotton and cotton products
- Machinery and related equipment
- Iron, steel products
Few facts about Export Business in India
The major destinations for export in India in 2019-20 were China, the United States of America, the United Arab Emirates, and Hong Kong.
From April to November 2019, the total value of exports done from India was about Rs. 26911 billion.
If you are planning for an export business in India, this is the right time due to its economic scenario. You can gain the most from this by participating enthusiastically and intelligently in international export. It will gain you the profits as well as for the country.
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Q. What is an export business?
Ans. In an export business, the exporter needs to sell products to customers residing in other countries. The products get produced in one country and get shipped to another one. It is a business where the exporter can earn huge profits.
Q. What does one need to start a business of exporting services?
Ans. Some mandatory things are required to start this business. These things include setting up an organisation, opening a current account, a PAN number, IEC, RCMC, etc.
Q. What are the types of export company?
Ans. There are three types of export company as given below:
1. Export management organisation: It handles everything from manufacturing to selling the products.
2. Export trading corporation: They usually target big markets to get the orders and then source the manufacturers and suppliers to get it delivered.
3. Export merchants: These people usually source the supplies and repack them, and then they export the products to other places around the world.
Q. How to obtain the Permanent Account Number for export business in India?
Ans. The person who is starting an export business needs to obtain a PAN, which can be obtained from the Income Tax Department.
Q. How to get IEC (Import Export Code) in India?
Ans. To get into an export business, the organisations require an IEC, which can be obtained from the Director-General of Foreign Trade.
Q. What is the Registering Cum Membership Certificate (RCMC)?
Ans. Every exporter must get membership from the Export Promotion Council with jurisdiction over the commodity you are trading.
Q. What is Foreign Trade Law in India?
Ans. Indian Foreign Trade Legislation is managed by Foreign Trade Act 1992. The Indian government permits export from Indian Shores through this Foreign Trade Law.