Gold is a valuable asset for Indians. We not only love to adorn ourselves with gold jewellery but also invest in this precious element for financial support. Moreover, gold is treated with high respect by Indians and is a part of our rich cultural heritage.
Besides, gold has a significant contribution to the Indian economy, and the demand for gold across the country was around 446.4 metric tons in 2020. In the fiscal year 2020, the country imported about 2 trillion INR of gold. A significant portion of gold is imported and exported in the form of gold bars and coins.
So, needless to say, starting a gold jewellery export business in India would be a profitable one because the demand for this precious metal is here to stay. The import-export sector has become popular recently, and many entrepreneurs are stepping into this domain.
However, one needs to weigh all the pros and cons before venturing into a gold jewellery export business.
According to the Gem and Jewellery Export Promotion Council (GJEPC), gems and jewellery exports have seen a significant decline of 25.71% in the fiscal year 2021, which is around INR 1,85,952.34 crore in the financial year 2020-21.
So, it would be best if you considered both sides of the coin while exploring export business opportunities before it turns out to be a nightmare. Let’s discuss the aspects you need to consider before investing in the gold import-export sector.
How to Set Up an Export Firm?
In this section, we will discuss how you can set up a gold export business in India step by step.
● Step 1: First and foremost, you need to choose the type of business entity, such as a partnership, proprietorship, private company, limited liability partnership, limited company, registered society, trust, or HUF (Hindu Undivided Family). After you have decided your nature of business entity as per your preferences and needs, you need to get your company registered following India’s corporate laws.
● Step 2: Next, you must choose your preferred mode of carrying out the export operations, such as either as a manufacturer exporter or merchant exporter, or both.
● Step 3: Apply for the grant of PAN for your firm. It is essential to obtain your PAN or Permanent Account Number issued by the Income Tax Department of India. You can fill out an online application form here.
This is a mandatory step and is required while opening your current A/C for your firm and also while applying for the IEC number allotment.
● Step 4: Next, and the most obvious, you need to open a current bank account with a bank that is authorised and permitted to deal in foreign exchange. The bank will then issue an AD (Authorised Dealer) Code, which needs to be registered with the Customs.
However, to open a savings or current bank account, you must have chosen a name for your firm or company. You will need the following documents to open your bank account:
a) Photocopy of the PAN number. In case you fail to show the PAN number at the time of opening your bank account, you must submit a declaration in Form 16 if yours is a partnership or a proprietorship firm and Form 57 if yours is a company. This is a declaration in which the account holder states that s/he has applied for a PAN number and s/he would be submitting it to the bank as soon as they receive it.
b) Photocopies of ration card.
c) Recent photographs of the authorised signatories.
There may be a few other documents that you need to submit along with the account opening form, appropriately filled and duly signed by the authorised signatories.
● Step 5: Once you have opened your bank account and received your AD Code, you need to register with the Goods and Services Tax Department. This is required to obtain your GSTIN (Goods and Services Tax Identification) Number, which you will require while claiming refunds on your taxes. You can register with the GST Department by applying online.
● Step 6: Now comes the most important step of successfully opening an export business. You need to obtain your unique IEC (Importer-Exporter Code), which is mandatory for starting an export business from India (or import business, for that matter). Without this IEC code, no person or body is permitted or authorised to deal in imports or exports of gold jewellery in the country (unless specifically exempted).
The IEC is issued separately by the DGFT (Directorate General of Foreign Trade) and can be obtained by any of the following:
c) Limited Company
To apply for IEC, the firm must have a PAN, a valid address, and an active bank account registered in the name of the firm. Your firm’s address may also be verified physically by the DGFT after issuing the IEC.
You can fill and submit the online application for IEC here.
● Step 7: Once you have obtained the IEC, you need to register an AD Code at every port from where your goods would be cleared by customs. This step is necessary because the Ice Gate portal’s EDI system won’t permit any shipping bill generation if a registered AD Code is missing.
If you have a valid AD Code registration with the customs, you may also be eligible for government benefits, which you can get credited directly into your bank account.
● Step 8: Next, you need to get your BIN (Business Identification Number), which is based on your PAN. The BIN will be issued by the Customs before generating the shipping bill for clearing your export goods from each port.
● Step 9: You need to register with the EPC (Export Promotion Council) and Commodity Boards for availing authorisation to carry out imports or export operations. Exporters are also required to obtain RCMC (Registration cum Membership Certificate), which is granted by the respective Export Promotion Councils/ Commodity Boards/Authorities/FIEO.
To deal in Gems and Jewellery commodities exports under chapter 71, the GJEPC is the Export Promotion Council. To apply online, visit www.gjepc.org.
● Step 10: Last but not least, you need to get an E-Sanchit Registration on the ICEGATE portal (Indian Customs Electronic Gateway), which is a national portal of Indian CBIC (Central Board of Indirect Taxes and Customs) providing e-filing services to cargo carriers, trade, and other trading partners via the electronic medium. To avail of the e-Sanchit facility, all IEC holders have to register their IEC on the ICEGATE portal.
Once you have set up your export firm by complying with all the legal requirements and registrations, you may proceed to begin your operations, which includes the following primary steps:
- Select Your Product: Keep in mind that the Indian government has banned the export of gold jewellery or medallions beyond 22 carats. This is a huge blow to gold exporters, especially those who used to import gold coins in their pure form, converted them into jewellery with some value addition, and then shipped them out of India. So, you need to select a product for your exports (say gold jewellery) that would contain gold under 22 carats.
- Select Your Markets: Research the overseas market size and competition, and evaluate the export benefits available for various countries as per the FTP.
- Find Authorised Suppliers and Buyers: Participation in exhibitions, trade fairs, buyer-seller meets, B2B portals, etc., may help.
- Procure an Export Order: This can be done by sending samples or a proforma invoice.
- Start your Manufacturing Operations: This process begins once you receive orders. You can either establish your own manufacturing system or buy goods from other manufacturers.
- Perform Quality Checks: This is a must for every exporter who needs to get their goods inspected by the authorised person before exporting.
- Getting an Insurance Policy: It is essential to have a financial backup in case of losses in transit or otherwise because the gold jewellery exports business is quite risky.
- Dispatch, Customs Clearance, and Shipment: Once your goods are packed and ready, you need to dispatch them to the respective airports/ports for transit. Next, you must abide by all the customs procedures at each individual port and get your shipping bill issued. You may also hire a CHA (Clearing House Agent) for this purpose. Finally, after the customs clearance, your goods are ready for shipment.
- Taking Care of Your Accounts: The gold jewellery export business involves careful management of your day-to-day accounts because it’s a high-risk business. You may opt for the OkCredit app, which is a digital ledger to track and manage all your transactions, loans, profits, and revenue generation on one platform.
To conclude, you need to do your homework well before exploring gold jewellery export opportunities in India. Otherwise, you may run the risk of tremendous loss. We hope the above tips will help you grow your gold export business successfully.
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Q. How much does it cost to start the gold export business in India?
Ans. The initial investment could be anywhere between INR 60,000 and INR 1,00,000, depending on the type of company you are starting.
Q. Do I need a license to start the gold export business?
Ans. Yes, you need to apply for a license before starting your gold business in India.
Q. How much time does it take to get your export license request approved?
Ans. It may take up to 6 weeks and more, depending on how quickly you submit the documents and the accuracy of the information.
Q. How to find the best buyer for gold jewellery overseas?
Ans. B2B websites can help you find genuine buyers for exporting gold jewellery from India. These B2B websites are both cost-effective and time-saving since they bring together traders from across the globe. For contacting jewellery buyers worldwide, you can check out the wholesale B2B platforms.