How to Start Export Business from India: Top Requirementss

IIndia has emerged as a significant player in global trade, with numerous products being exported to various countries worldwide. The Indian government encourages export activities through initiatives such as “Make in India” and “Atmanirbhar Bharat,” promoting domestic manufacturing and exports. This article will discuss how to start an export business from India, the top products and countries for Indian exports, the benefits, and the challenges Indian exporters face.

How to Start Export Business From India

To begin your export journey from India, consider these steps:

1. Market Research: Identify potential markets based on demand, competition, tariffs, and regulations. Utilize resources like the Director-General of Foreign Trade (DGFT), Ministry of Commerce & Industry, or industry associations.
2. Choose a Product: Select a suitable product that meets international quality standards and enjoys competitive advantages due to low production cost, availability of raw materials, skilled labour force, etc.
3. Register Your Company: Obtain necessary registrations, including Import-Export Code (IEC) from DGFT, Permanent Account Number (PAN), Tax Deduction and Collection Account Number (TAN), and Goods and Services Tax Identification Number (GSTIN). You may also need additional licenses depending on the type of goods you plan to export.
4. Create an Export Plan: Prepare a comprehensive export plan outlining marketing strategies, logistics arrangements, pricing structure, payment terms, shipping methods, documentation requirements, and regulatory compliances.
5. Partner with Reliable Suppliers: Establish strong relationships with reliable suppliers who consistently provide high-quality products at competitive prices. Ensure they comply with environmental, social, and ethical guidelines.
6. Develop International Networks: Attend trade shows, exhibitions, and conferences in India and abroad to build connections with prospective buyers, agents, distributors, and other stakeholders. Leverage online platforms like Alibaba, Indiamart, and LinkedIn to expand your reach.
7. Understand Incoterms: Familiarize yourself with the standardized commercial terms published by the ICC called Incoterms. These terms define responsibilities between importers and exporters regarding transportation, delivery, insurance, taxes, and customs clearance.
8. Comply with Regulations: Adhere to all applicable laws, rules, and regulations related to export controls, sanctions, anti-dumping duties, and intellectual property rights protection. Stay updated with changes in policies and procedures announced by relevant authorities.
9. Manage Finances: Set up appropriate banking facilities for foreign transactions, maintain proper financial records, and secure adequate financing options to manage cash flows effectively. Consider obtaining credit guarantees from banks or institutions like ECGC (Export Credit Guarantee Corporation of India Ltd.) to mitigate risks associated with non-payment by overseas customers.
10. Seek Professional Advice: Consult experts in legal compliance, taxation, accounting, logistics, and market research to ensure smooth operations and sustainable growth.

Top Products to Export from India

According to data released by the Department of Commerce, Government of India, here is a list of top ten products exported from India during April 2022 – February 2023:

1. Petroleum products ($110 billion+)
2. Gems & Jewelry ($40 billion+)
3. Drugs & Pharmaceuticals ($25 billion+)
4. Electronic goods ($22 billion+)
5. Iron & Steel ($20 billion+)
6. Cotton Yarn/Fabrics ($11 billion+)
7. Machinery ($10 billion+)
8. Organic & Inorganic Chemicals ($9 billion+)
9. Automobiles ($9 billion+)
10. Plastic & Linoleum ($8 billion+)

 

Benefits of Exporting From India

• Access to larger markets beyond national boundaries
• Increased revenue and profitability
• Improved brand recognition and reputation
• Economies of scale leading to lower per-unit costs
• Diversified risk exposure compared to relying solely on local sales
• Technological advancements through interactions with global partners
• Ability to leverage comparative advantages in resource endowment, skill sets, or infrastructure

Challenges Faced By Indian Exporters

1. Complex Regulatory Environment: Navigating intricate export regulations, licensing norms, and paperwork requirements poses significant challenges for exporters.
2. Infrastructure Deficiencies: Suboptimal transport networks, warehousing facilities, and power supply affect efficiency, reliability, and timely deliveries.
3. Quality Concerns: Maintaining consistent product quality according to international benchmarks remains challenging for many Indian businesses.
4. Payment Risks: Delayed payments, defaults, and fraudulent practices expose exporters to financial uncertainties.
5. Competition from Low-Cost Producers: Competing against low-cost producers in countries like Vietnam, Cambodia, and Bangladesh puts pressure on margins.
6. Logistical Issues: Coordinating seamless movement of goods across multiple modes of transport involves dealing with complex processes, documentation, and service providers.
7. Intellectual Property Rights Infringement: Counterfeiting, piracy, and trademark violations undermine legitimate businesses’ efforts to protect their innovations and brands.
8. Limited Marketing Budgets: Small and medium enterprises often need help to allocate sufficient funds towards building robust marketing campaigns targeting international audiences.
9. Tariff Barriers: Some countries’ High import duties restrict access to specific markets, affecting competitiveness and profitability.
10. Geopolitical Tensions: Escalating geopolitical conflicts, trade disputes, and diplomatic tussles create uncertainty and instability in global commerce, impacting exports negatively.

Conclusion

Starting an export business from India presents unique opportunities but also comes with its fair share of challenges if you need help contacting Bharat2Export. However, armed with the correct information, strategic planning, and resilience, aspiring entrepreneurs can navigate this landscape successfully and contribute significantly to India’s growing prominence in world trade.

Frequently Asked Question

Q1. How do I find buyers for my exported products?

Ans.  To find buyers for your exported products, follow these steps:

1. Perform thorough market research to identify potential markets, competitors, and customer preferences.
2. Join industry associations, chambers of commerce, and trade bodies that facilitate networking events, exhibitions, and seminars where you can meet potential buyers.
3. Use digital platforms like Alibaba, IndiaMART, and Globalsources to showcase your offerings and connect with interested parties.
4. Participate in international trade fairs and expos to display your products and services directly to targeted audiences.
5. Engage professional agencies specializing in matchmaking between sellers and buyers, such as EEN (Enterprise Europe Network), FITA (Federation of Indian Export Organizations), or consultants providing similar services.
6. Collaborate with freight forwarders, custom brokers, and logistic companies experienced in handling cross-border shipments since they frequently work with importers and can help introduce you to potential clients.
7. Build long-term partnerships through regular communication, trust-building measures, and demonstrating commitment to delivering quality products and after-sales support.

Q2. What are the necessary documents required for exporting products from India?

Ans.  Some essential documents needed for exporting products from India include:

1. Commercial invoice
2. Packing list
3. Bill of lading / Airway bill
4. Inspection certificate (if applicable)
5. Certificate of origin
6. Export declaration form
7. Insurance policy document (if insured)
8. Customs duty exemption certificates (if eligible)
9. Licenses, permits, or authorization letters mandated by law, regulation, or contract
10. Any other supporting documentation specified by the buyer, bank, or concerned authority.

Q3. What is the process for obtaining an Export-Import (EXIM) license in India?

Ans. Here are the general steps involved in acquiring an EXIM license in India:

1. Determine if you require an EXIM license based on the item(s) listed under Schedule A, B, C, or D of the Indian Trade Classification (ITC)-HS code system maintained by the Central Board of Indirect Taxes and Customs (CBIC).
2. Visit the official website of the Director General of Foreign Trade (DGFT): <https://www.dgft.gov.in/>
3. Register as a user on the portal and apply for registration number (ID) and password.
4. Complete Part A of the application form (Form ANF-2A) using the registered ID and password.
5. After submitting Form ANF-2A, download Form ANF-2B and fill out the requisite details.
6. Upload scanned copies of mandatory documents mentioned in Form ANF-2B along with the completed form itself.
7. Pay the prescribed fees via net banking, debit card, credit card, or challan generated through the portal.
8. Upon successful submission and verification, the applicant receives a provisional approval message followed by a final confirmation containing the license number once approved.

Note: Specific categories might have different requirements; always refer to the latest notifications issued by the DGFT for accurate guidance.

Q4. How do I calculate the export duty and taxes on my products?

Ans. Calculating export duty and taxes involves understanding the harmonized system (HS) codes assigned to each commodity, applicable rates, and any available incentives provided by free trade agreements (FTAs) or other schemes introduced by the government. To determine these values accurately, visit the official websites of CBIC and DGFT regularly to stay informed about updates and amendments. Additionally, seek advice from professionals familiar with relevant legislation and procedural nuances.

Q5. What are the packaging and labeling requirements for exported products?

Ans. Packaging and labeling requirements vary depending on the destination country and nature of the product. Generally, packages should be sturdy enough to withstand transit damage while ensuring safe handling instructions are visible. Labels must contain crucial information such as product description, quantity, weight, dimensions, manufacturer name, address, contact details, batch number, date marking, expiration dates, storage conditions, warning symbols, and safety precautions when necessary. Always adhere to specific regulations enforced by the importing nation, particularly those concerning health hazards, dangerous goods, food items, and pharmaceuticals.

Q6. How do I ensure compliance with international trade regulations?

Ans. Ensure compliance with international trade regulations by conducting rigorous research before initiating export activities. Study relevant conventions, treaties, protocols, directives, decisions, recommendations, and opinions established by organizations like WTO, UNCTAD, OECD, and others. Furthermore, remain cognizant of regional accords governing preferential treatment among participating nations. Regularly review pertinent statutes and orders disseminated by central and state governments responsible for implementing external trade policies. Finally, engage qualified experts capable of guiding you through the maze of bureaucratic hurdles inherent in transnational commerce.

Q7. What are the modes of transportation available for exporting products from India?

Ans. Various modes of transportation exist for exporting products from India, such as:

1. Sea Freight: Primarily used for bulky, heavy, or large consignments shipped via container vessels, roll-on/roll-off ships, or break-bulk carriers.
2. Air Freight: Ideal for lightweight and time-sensitive cargo transported via passenger or dedicated cargo aircraft.
3. Railways: Suitable for moving goods domestically until reaching ports, border checkpoints, or air freight hubs connected internationally.
4. Road Transport: Effective option for door-to-door pickup/delivery over shorter distances, usually linking railheads, seaports, or airport terminals.
5. Multimodal Transport: Combines two or more means of conveyance managed by single operators offering integrated solutions covering entire journeys from origins to destinations.

Q8. What are the payment terms for exporting products from India?

Ans. Common payment terms practiced in exporting products from India consist of:

1. Cash Against Documents (CAD): Importer pays the seller upon presentation of certain agreed-upon documents.
2. Letters of Credit (LC): Financial institution issues irrevocable undertaking guaranteeing payment subject to fulfillment of predefined conditions outlined by issuing banks and confirmed by correspondents.
3. Open Account: Buyer settles invoices according to mutually agreed schedules without requiring collateral securities.
4. Documentary Collections: Bank acts as an intermediary collecting payment from the importer on behalf of the exporter after receiving specified papers evidencing title transfer and ownership rights.
5. Consignment Basis: Seller delivers merchandise to agent/consignee tasked with selling them locally, deducting commission/expenses, and remitting balance proceeds back to principal suppliers less any outstanding liabilities

Q9. How do I handle disputes with buyers or intermediaries during the export process?

Ans.  Resolving disputes involving buyers or intermediaries necessitate employing tactful negotiations backed by solid evidence substantiating one’s position. When disagreements arise, consider engaging mediators conversant with mediation techniques designed to promote dialogue, clarify misunderstandings, and propose compromise alternatives fostering mutual satisfaction. If satisfactory outcomes cannot be achieved through conciliation attempts, litigation proceedings initiated either domestically or internationally become inevitable, depending on jurisdictional clauses embedded in contracts entered into previously. Alternatively, arbitration tribunals constituted independently could render binding judgments enforceable globally pursuant to New York Convention provisions ratifying reciprocal obligations obligating signatories recognizing arbitral awards rendered elsewhere.