How To Start Up A Steel Import/Export Business?

The pandemic has made trading a roller coaster ride for traders globally. With India reporting a 24.6% reduction in exports and a 22% increase in imports in January 2021, one can easily sense the overall disturbance in foreign trade. While the figures are indeed discouraging, but the future is bright, it is still counted as a top steel exporter. Hence, starting a steel import/export business comes loaded with lucrative prospects. This business is profitable in itself and allows too many diversions and expansion opportunities when import-export business ideas are taken into account.

Below is a detailed guide on how to start import-export business of steel.

How to Export Steel?

Exporting steel is one of the best export business ideas. If you are wondering how to export steel and whether the process is lengthy and complex like importing steel, the answer is no! However, it has some steps that you need to follow.

• After there is an agreement on terms of payment and delivery, you need to obtain a proforma invoice
• Then, you will need an export order and purchase order from the overseas buyer
• You can include either advance payment, documents against acceptance, documents against payment, or a letter of credit, as a clause in terms of payment
• Take pre-shipment packing credit or post-shipment finance from a bank (optional)
• Take insurance against the credit risk or other export-related risks
• Go for palletisation or crating for proper packaging of the steel
• Get the export invoice, export packing list, and certificate of origin prepared based on the purchase order or LC
• Complete export customs clearance, and get the Bill of Lading or AWB issued by the carrier
• Get HAWB or HBL issued if consolidator is involved

How To Import Steel?

Starting an import business of steel is one of the best import business ideas. The process of importing steel in India has several stages:

• First, the standard quality approval, in which the governmental bodies check the material and give it a quality approval certificate.
• The steel imported should be as per the hazardous waste management rules and regulations.
• Obtaining a permit from the Ministry of Environment and Forest, as this department regulates the import and consumption of materials, can affect the environment.
• The next step involves getting a laboratory certificate or government-accredited certificate from the importing country along with a sample of the steel
• Obtaining a certificate from the pollution control board is necessary as it is an essential document containing information about the steel
• A pre-shipment inspection certificate obtained from an inspection agency authorised by the exporting country is also an important requisite in the list of documents

Other important things that you need to cover when importing steel is, to look for ports from where you can access the imported steel, paying the anti-dumping duty, and then registering yourself as a trader or importer of steel.

How to Start Import and Export Business of Steel?

1. Market Research

Before launching your import and export business idea, you must do your research. Categorise the kind of business you want to establish. Generally, the trade market is divided into three categories of firms -

• Export Trading Companies that work to provide international buyers,
• Export Management Companies operate on behalf of the export companies and perform operations like finding buyers, distributors, arranging logistics, etc.
• Import-export Agents are people basically purchasing goods from both domestic and international buyers and reselling them globally.

Before starting a steel import-export business, your market research should also consider governmental schemes like Duty-Free Import Authorisation and Advance Authorisation. You can apply for these schemes to gain financial aid and support. Other areas of consideration are the current trading atmosphere, the market rate of steel and global competition.

2. Completing Legalities for the Steel Import-Export Business

As mentioned above, the steel procured or exported undergoes a series of checks. However, your steel import-export business undergoes scrutiny with your registration and verification. The following documents are required for verification before you get going with the business:

• KYC documents of owners/partners
• Pan Card of owners/partners
• Passport size photographs
• Company registration certificate
• Bank’s current account details, ITR, sales tax etc
• Proof of hired freight forwarding company
• Import Export Code (IEC)
• Registration and membership certificate (RCMC), issued by the Exports Promotion Council (EPC)
• Financials - certified and audited by CA
• Business address proof
• Income proof and deceleration documents

3. Choose Target Market

Deciding which market you want to deal in is the primary question when starting up a steel import/export business. This could involve inter-city dealings, intra-city dealings, inter-state dealings or overseas dealings. This step in the entire business setup is the most crucial one and aided by the amount of market research you do before stepping into the business. The top 15 countries in the steel trade are:

• United Kingdom
• Indonesia
• Sweden
• Italy
• United States
• Austria
• Spain
• Germany
• France
• Taiwan
• Malaysia
• Belgium
• Netherlands
• Finland

Although the pandemic has affected world trade dealings, it's a safer option to begin dealing in these countries and set up a steel import-export business with buyers and suppliers of these countries.

4. Sourcing Buyers And Suppliers

After all the background work is dealt with, you can start looking for buyers or suppliers for your steel import-export business. When the import-export business ideas come up, the first thought that comes to mind is of potential customers. So, in this case, you can source your buyers or suppliers online, get contacts from personal networks, or take the help of EMCs.

Other tasks in setting up steel import-export business include fixing a base rate with 10-15% margin as your profit, looking for investors, and managing logistics. While the pandemic has affected global trade, things are getting back on track with some new emerging players. emerging. We hope, with our guide, you would have got some idea about the primary requisites for starting a steel import-export business.

Also Read:

1) How to Start Dry Fruit Export Business in 2021 from India?
2) How to start a business on importing raw materials?
3) How to Start a Meat Export Business in India?
4) How to start a gold jewellery export business?
5) Steel Manufacturers in India

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FAQs

Q. Who is the world’s biggest exporter of steel?

Ans. The World’s biggest exporter of steel in the UK. In the year 2019, it constituted a big 23.4% of the steel trade.

Q. What are some of the top import-export businesses in the world?

Ans. Some of the top import-export businesses in the world are gems and precious metals, fuels, computers, electrical machinery & equipment, plastics, iron & steel, and organic and inorganic chemicals.

Q. Who sets up the trade schemes in India, and what are some helpful schemes for startups?

Ans. The director-general of foreign trade (DGFT) sets schemes in India. Some of the helpful schemes for startups in trading are Services Exports from India Schemes, Duty-Free Import Authorisation, Export Promotion of Capital Goods, Advance Authorisation and Merchandise Exports from India Scheme.

Q. What are some famous import-export portals?

Ans. Some famous import-export portals are Aliexpress, Alibaba, Amazon and eBay.

Q. What are some good steel import-export business ideas?

Ans. Some good steel import-export business ideas are alloy steel plant, steel furniture business, steel fabrication, safety pin making business, and nut bolts business. Just a steel import/export business is also lucrative in itself.