While the government has always been encouraging when it comes to exports, the pandemic may have created a new opportunity for aspiring small business owners who wish to start their own venture in their hometowns rather than move to large cities.
The widespread use of the internet to shop, pay and communicate makes export and import business in India a lucrative one as e-commerce can allow sellers to reach customers across the globe with their strong supply chain system readily in place.
However, if you are planning to start your own export business in India, you are making a good start by learning about the requirements before approaching the bank.
While the list of items that can be exported is far and wide, there are some products that are prohibited from being exported. Make sure your product is not one among them.
India is known for mainly exporting agricultural products. You can place a source for these products in your own area and export them.
Quality of the product will also be an important factor in receiving future orders and reviews from customers.
Analysing your target market
Research the market size, competition, quality requirements, payment terms etc when you select an overseas market.
You can also look into export benefits available for a few countries under the Foreign Trade Policy.
Export promotion agencies, Indian Missions abroad, and your own acquaintances can prove helpful in recognising the initial market, as well as, expanding it.
Select business name and logo
Before you decide to register or look for buyers, select a name and logo for your business.
Like any legitimate business run in India, you will need to get registered. It could be registered as a sole proprietorship, in partnership, private limited company, or LLP.
Hire a lawyer to help you with the legal proceedings of registering the business.
It is mandatory for businesses to obtain PAN (Permanent Account Number) from the Income Tax Department.
Open a current account at any commercial bank that is authorized to deal in Foreign Exchange.
Obtain Importer-Exporter Code (IEC) Number
An exporter/importer in India is required to obtain an IEC number as per Foreign Trade Policy. It is a key business identification number that can be applied for online at www.dgft.gov.in.
After the introduction of GST (goods and service tax), IEC number is the same as the PAN of the firm.
RCMC (Registration Cum Membership Certificate) is a membership certificate issued for 5 years by Export Promotional Councils (EPCs) or Commodity Boards of India. It is proof that your business has been registered with the council/board and is useful when applying for any benefit or concession under Foreign Trade Policy like duty drawback, duty credit scrips etc.
Get covered through ECGC
Dealing with an overseas client involves risks from the insolvency of the buyer/country. These payment risks can be covered by ECGC Limited (Formerly Export Credit Guarantee Corporation of India Ltd), a company wholly owned by the Government of India which provides export credit insurance support to Indian exporters under the Ministry of Commerce.
Buyers and online presence
Make sure you have a proper product catalogue, price, payment terms and other related information, ready. While these are to be placed on a company website (a definite requirement), you can also print offline catalogues to give prospective buyers.
Since your target audience is overseas, you may also look at creating a multi-lingual website for wider reach.
Make sure your website also has an introduction to the main people in the business besides the catalogue. This will help your prospective customers in getting to know you and how to reach you.
You may also set up an online order taking option along with email or feedback setup for customers to reach you for trade enquiries. In fact, it would be wise to be reachable on every known social media platform for queries.
As for online marketplaces, established names like Amazon.com, Alibaba.com, Aliexpress.com, DHGate.com and other B2B as well as B2C portals allow exporters to be listed as vendors on their websites and connect with their customers across the globe.
Offline, you can reach buyers at trade fairs, buyer-seller meets and exhibitions. Export Promotional Councils, Indian Missions abroad, overseas chambers of commerce can also be helpful.
This is not an exhaustive list of requirements. There are further procedures with regard to procuring material to be exported, quality control, warehousing, packaging, pre and post-shipment finance assistance from your bank, marine insurance, customs procedures, documentation and more, that need to be taken care of before you receive proceeds from the export business.
This article is meant to only give you guidance on getting started and thorough research is required in moving forward.