Export Business: Export business in India is the latest avenue for reaching out to a growing global market, especially considering that its strong manufacturing sector, beneficial governmental policies, and strategic location accord immense opportunities to reach overseas.
Setting up an export-oriented business, on the contrary, requires a considerable amount of planning and care since there is a lawful framework for its implementation through a strategically followed course every now and then.
If you are interested to know “how to start export business in india”a step-by-step guide has been provided herein for setting up a successful export venture in India.
1. Market Research and Product Selection
Precisely, ahead of venturing into the export business, what is important is to have thorough market research. Identify in detail the products that are on high demand in the international market. Match them with your Company’s Business Strengths. Analyse the same:
- Global demand trends.
- Potential competitors.
- Regulatory requirements of target countries.
When you find the right product, ensure it meets the required international standards and quality certifications.
2. Register Your Business Entity
An export business can be initiated by choosing a suitable structure of organization. You can choose any one amongst sole proprietorship, partnership, LLP or private limited company depending on your objectives of business and availability of resources.
Give legal look to your business after you have decided on the business structure by getting it registered with MCA.
3. Opening of a Dedicated Bank Account
All exports, however, need to have a current account, and all financial transactions in this regard have to be carried out through this. You should, therefore, open your current account with a bank authorized to deal in foreign exchange.
It would facilitate your tax reporting as well as the statutory requirements of the law, besides handling all aspects relating to the payment of your exports.
4. Obtain a Permanent Account Number (PAN)
The PAN is the identification number assigned by the Department of Income Tax, and that, too, becomes obligatory for every business in India.
In simpler terms, it is also about tax compliance, a fact that needs attachment to your business bank account, too.
5. Importer-Exporter Code (IEC)
IEC is an alphanumeric code issued to an exporter/importer by the Directorate General of Foreign Trade, Government of India. Importantly, it is one of the basic requirements that every business entity engaged in export or import has to follow.
The application is online in nature, wherein you have to fill in general business details with PAN and bank account information.
6. Obtain a Registration Cum Membership Certificate (RCMC)
It is also compulsorily required to be registered with the respective Export Promotion Council or Commodity Board for availing benefits and incentives announced by the government from time to time, which issues an RCMC.
It enables you to get an exemption from tax and helps in attending fairs and exhibitions organized all over the world.
7. Know Export Incentives and Schemes
The Government of India offers a number of schemes to improve the export. One of them is Merchandise Exports from India Scheme, under which the exporters are provided with duty credit scrips.
Familiarize yourself with such schemes to enhance profitability.
8. Logistics and Shipping
Logistics are the backbone of exports. Liaise with good logistics partners to ensure timely and safe delivery at the doorstep. Prepare the required shipping documents, such as:
- Bill of Lading/Airway Bill
- Commercial invoice
- Packing List
- Certificate ofOrigin
- Insurance Certificate
Ensure that your goods are adequately labelled, packed and marked according to international practice.
9. Customs Procedures and Documentation
Understand the customs clearance process for India and the target country of export. Documents mainly needed include:
- Shipping Bill
- Export Invoice
- Packing list
- Certificate of origin
Filing error-free documentation will smoothen the customs clearance process.
10. Quality Control
International buyers expect nothing but the best quality. Ensure to set up very strict quality control in order for you to meet the global standards.
Getting ISO certification or any other certifications will provide credibility to your products.
11. Verify Orders and Determine Terms of Payment
Once you begin to get inquiries from overseas buyers, confirm the order and negotiate a good payment term for you. Get a secured method of payment like:
- L/C
- Letter of Credit LC
- Advance payments
- Bank guarantees
These methods minimize risks and guarantee timely returns for your goods.
12. Arrange Financing
This will enable you to cover the cost of raw material, labor, and logistic costs if you need pre-shipment or post-shipment finance from banks in case of a large export order.
13. Insurance and Risk Management
It is obligatory to have marine insurance to cover your goods against loss or damages in transit. An ECGC policy will cover your business against payment risks.
14. Marketing and Finding Buyers
Showcase your business all over the world through various online platforms and trade fairs/exhibitions. Online presence can be created through:
- Business websites
- Social media marketing
- Participating in B2B platforms
All these strategies will help you get in touch with buyers around the world.
15. GST Compliance
As a general rule, all exports under GST are zero-rated, but failure to comply with the requirements of filing returns under GST will attract penal provisions.
You should first get your business registered under GST to claim refunds/input tax credits.
16. List of documents to be provided to the bank
After shipment, send all export documents to your bank for payment processing. These include:
- Bill of Exchange
- Airway Bill
- Commercial Invoice
- Certificate of Origin
Ensure that these documents are dispatched within the required time frame so that there is no case of delay.
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Endnote
Setting up an export business in India requires a lot of planning, following legal requirements, and efficient execution. The above steps of “how to start export business in india” will facilitate your business to be strategically positioned to succeed in the global market.
Avail of government schemes, maintain high standards of quality, and undertake effective marketing strategies for further growth in your export business.
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