India is a country with a huge potential for exports, as it has a large and diverse market, a skilled workforce, a favorable exchange rate, and a supportive government policy. However, starting an export business in India is not an easy task, as it involves many steps and procedures that need to be followed carefully. In this essay, we will discuss some of the key aspects of starting an export business in India, such as setting up a company, obtaining an importer-exporter code (IEC), registering with export promotion councils (EPCs), choosing eligible products and markets, identifying potential buyers, offering product samples, negotiating contracts, arranging logistics and documentation, complying with customs regulations, and receiving payments.
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Setting up a company:
The first step to start an export business in India is to set up a company by selecting one of the following legal business structures: partnership firm, limited liability partnership (LLP), private limited company, or public limited company. The choice of the business structure depends on various factors such as the nature of the business activity, the number of partners or shareholders involved, the capital requirement, the tax implications, and the liability protection. The company has to be registered with the Ministry of Corporate Affairs (MCA) by filing the necessary forms and documents online through its portal. The company also has to obtain a permanent account number (PAN) from the Income Tax Department.
Obtaining an import-export code (IEC):
The next step to start an export business in India is to obtain an import-export code (IEC) from the Directorate General of Foreign Trade (DGFT). An IEC is a 10-digit alphanumeric code that acts as a unique identification number for any person or entity engaged in international trade. An IEC is mandatory for exporting goods or services from India or importing goods or services into India. An IEC can be obtained online by filling an application form on the DGFT website along with submitting scanned copies of PAN card³, bank certificate, address proof, etc. The application fee for obtaining an IEC is Rs. 500/-.
Registering with export promotion councils (EPCs):
The third step to start an export business in India is to register with one or more export promotion councils (EPCs) that are relevant to your product or service category. EPCs are autonomous bodies set up by the government under the Ministry of Commerce and Industry to promote and facilitate exports from India. EPCs provide various benefits and services to their members such as market information, trade leads, buyer-seller meetings, trade fairs participation.
Choosing eligible products and markets:
The fourth step to start an export business in India is to choose eligible products and markets that suit your business objectives, capabilities, and resources. You can conduct a market research to identify the demand, competition, pricing, quality standards, regulations, and preferences of your target markets. You can also consult various sources of information such as trade directories, trade journals, trade associations, government agencies, etc. to find out the potential products and markets for your exports. Some of the major products that India exports are textiles and garments, gems and jewelry, engineering goods, chemicals, agricultural products, etc. Some of the major markets that India exports to are USA, UAE, China, Hong Kong.
Identifying potential buyers:
The fifth step to start an export business in India is to identify potential buyers for your products or services in your target markets. You can use various methods to find buyers such as online platforms, trade fairs and exhibitions, trade missions and delegations, business directories, referrals and recommendations, etc. You can also contact the Indian embassies or consulates in your target countries for assistance and guidance. You should try to establish a rapport with your prospective buyers by communicating effectively, understanding their needs and expectations, offering competitive prices and terms, and providing quality products and services.
Offering product samples:
The sixth step to start an export business in India is to offer product samples to your prospective customers to showcase your product quality, features, specifications, and benefits. Product samples are a way of building trust and confidence with your buyers and increasing the chances of getting orders. You should send product samples along with a proforma invoice that contains details such as product description, quantity, price, delivery terms, payment terms, etc.. You should also ensure that your product samples comply with the standards and regulations of your target markets.
Negotiating contracts:
The seventh step to start an export business in India is to negotiate contracts with your buyers after receiving their inquiries or orders. You should negotiate contracts that are clear, fair, and beneficial for both parties. You should consider various aspects such as product specifications, quantity, price, delivery terms, payment terms, quality assurance, dispute resolution, etc.. You should also ensure that your contracts comply with the laws and regulations of both your country and your target markets. You should use standard contract formats such as those provided by the International Chamber of Commerce (ICC).
Preparing documents:
The eighth step to start an export business in India is to prepare documents that are required for exporting your products or services. You should prepare documents such as commercial invoice, packing list, shipping bill, bill of lading or airway bill, certificate of origin, insurance certificate., etc. You should ensure that your documents are accurate, complete, and consistent with each other. You should also check the document requirements of your target markets and your buyers before preparing them.
Arranging transportation:
The ninth step to start an export business in India is to arrange transportation for your products or services to your target markets. You should choose a suitable mode of transportation such as sea, air, land, or multimodal depending on factors such as cost, time, distance, safety, reliability, etc.. You should also hire a freight forwarder who can help you with customs clearance, documentation, insurance, warehousing, etc. You should finalize the rate and terms with your freight forwarder and provide them with all the necessary details and documents.
Receiving payment:
The tenth and final step to start an export business in India is to receive payment from your buyers for your products or services. You should choose a suitable terms of payment such as advance payment, letter of credit, documentary collection, open account, etc. depending on factors such as trust, risk, cost, convenience, etc. You should also follow the payment terms and conditions agreed upon in your contract with your buyer. You should ensure that you receive the payment in full and on time.
Conclusion:
Exporting is a lucrative and rewarding business opportunity for Indian entrepreneurs who want to expand their markets and increase their profits. However, exporting also involves various challenges and risks such as competition, regulations, logistics, currency fluctuations, etc. Therefore, to start an export business in India successfully, one needs to follow a systematic and strategic approach that covers all the aspects of exporting from planning to execution. By following the steps outlined above, one can start an export business in India with confidence and ease.
