How to Start an Export/Import Business in India – Registration Formalities

how-to-start-an-import-or-export-business-in-india

Starting an export/import business in India is not simple. Lots of preparation is required by exporters before he start an export business. In this post, I will be discussing the the various registration formalities that you will need to complete before you start exporting to abroad.

1. Establish an organisation

The first step to start an export business in India is to start an organization. There are many options if you want to start an organization in India.

    • Private limited company

      • In private company you won’t be able to transfer shares to the public. If you want to start a private limited company, there should be at least 2 members and maximum 50 members. To start a private company there should be a minimum paid up capital of 1 lakh

    • Public limited company

      • In public limited company, you can transfer shares to the public. There should be at least 7 members and at most unlimited numbers. There should be a minimum paid up capital of 5 lakh

    • Unlimited company

      • In unlimited company the liability of the members is unlimited. You can use the personal assets of the members to settle the debts.

    • Sole proprietorship

      • In sole proprietorship, single individual will be owning the business and he will bear all the profits and losses

    • Partnership firm

      • In partnership firm, partners will own the business and they will share all the profits and losses.

2. Opening a current bank account

Exporters need to open a current bank account in the name of their firm/company. When you select the bank to open the current account for your business, you have to make sure that that bank is authorised by RBI to deal foreign currency transactions. Also, all the financial transactions of your export business should be made through this current account. The documents needed to open current account will differ depend on the type of organisation that you incorporated. In some banks the process to start a current account is very simple, and is difficult in others.

3. Obtaining PAN number for the company

Every exporter/importer in India should have a PAN card in the name of their business. PAN is a 10 digit unique code that help the government to distinguish every exporter/importer in India. PAN card is issued by the income tax department of India. The purpose of PAN card is to identify all the financial transactions done by a company and to prevent tax evasion.

Why Exporters need PAN Card?

  • Export income has many tax exemptions and deductions announced by the government of India. To claim all these exemptions, you will need to have PAN card for your business.

  • Every exporter or importer in India should have a unique code called Import Export Code (IEC). To apply for this IEC number you will need to have PAN card

How to apply PAN card for a firm

  • Go to the NSDL website
  • Fill the application form
  • In application type, select firm
  • Complete the application

4. Obtaining Importer Exporter Code (IEC) Number

Importer Exporter Code is a 10 digit unique code issued by Directorate General of Foreign Trade (DGFT). By India’s Foreign Trade Policy (FTP), IEC is mandatory for all the export/import from India. Once you got the IEC number, it has life time validity.

Why Importers need IEC number?

  • Importers won’t be able to import goods to India without IEC.
  • When the importer need to clear the goods from the customs department, IEC of the importer should be produced to the customs department

  • If the importer needs to send money to abroad, he will need to produce the IEC number to the bank.

Why Exporters need IEC number?

  • Exporters won’t be able to export goods to abroad without IEC.
  • When the exporter need to send the goods to abroad IEC of the exporter should be produced to the customs department
  • If the exporter needs to send the money abroad, he will need to produce the IEC code to the bank.

To apply for the DGFT code, visit dgft.gov.in

5. GST Registration

Exporters or importers should register for GST as the movement of goods/service in export/import is treated as interstate. This is a must thing to do if you are an exporter or importer. Export of goods or services is treated as a zero rated supply in India. Which means that you don’t have to pay GST for exporting goods even though you need to register GST. If the exporter paid IGST while exporting, he can claim a refund for the taxes he has paid.

6. Export Promotion Council (EPC) Registration

There are 26 export promotion councils and 9 commodity boards in India. Each EPC is focusing on promoting a particular good. EPC’s promote exporters to earn foreign exchange abroad. They are supported by the financial assistance from the government of India. EPC tries to project India’s image abroad as a source of reliable suppliers of high quality goods and services. EPC helps the exporters to meet the international standards and specifications. EPCs identify trends and opportunities in international market for goods and services and assist the members for take advantage of these opportunities. It is obligatory for every exporter to register with appropriate EPC that is dealing with the goods and services which the exporter export and obtain a registration certificate called Registration cum Membership Certificate (RCMC).

 

List of Export Promotion Councils and Commodity Boards in India.

1 Agricultural and Processed Food Products Export Development Authority – APEDA
2 Apparel Export Promotion Council – APEC
3 Basic Chemicals, Cosmetics and Dyes Export Promotion Council – CHEMEXCIL
4 Carpet Export Promotion Council – CEPC
5 Cashew Export Promotion Council of India – CEPCI
6 Chemicals and Allied Products Export Promotion Council – CAPEXIL
7 Coffee Board
8 Coir Board
9 Council for Leather – CLE
10 EEPC India – EEPC
11 Export Promotion Council for Handicrafts – EPCH
12 Gem and Jewellery Export Promotion Council – GJEPC
13 Handloom Export Promotion Council – HEPC
14 Indian Oil Seeds and Produce Export Promotion Council – IOPEPC
15 Indian Silk Export Promotion Council – ISEPC
16 Jute Products Development & Export Promotion Council – JPDEPC
17 Marine Products Export Development Authority – MPEDA
18 Pharmaceutical Export Promotion Council – PHARMEXCIL
19 Rubber Board
20 Power loom Development & Export Promotion council – PDEXCIL
21 Project Exports Promotion Council of India PEPC
22 Services Export Promotion Council-  SEPC
23 Shellac Export Promotion Council – SHEFEXIL
24 Spices Board[43] –
25 Sports Goods Export Promotion Council- SGEPC
26 The Cotton Textiles Export Promotion Council – TEXPROCIL
27 The Plastics Export Promotion Council – PLEXCONCIL
28 The Synthetic and Rayon Export Promotion Council –  SRTEPC
29 Tea Board
30 Tobacco Board
31 Wool and Woollens Export Promotion Council – WWEPC
32 Wool Industry Export Promotion Council – WOOLTEXPRO

7. Registration with Export Credit Guarantee Corporation [ECGC]

Export or import is associated with several risks. We can’t be 100% sure that the importer will pay for the goods the exporter sent. Or there is a high chance to lost the goods on the transit. If something like that happen, we will lose both the good we exported and the cash of the same. So in order to minimize risks like this, we should have to ensure insurance. For that there are insurance companies that will provide insurance to the export goods. The company in India that provide insurance for export is called Export Credit Guarantee Corporation [ECGC]. This is an agency owned by the government of India which tries to minimize the risks associated with the payments emanating from abroad. ECGC also assists exporters with better access to the credit facilities from bank and other financial institutions.

Conclusion

You will need to complete these registration formalities in order to start an export or import business in India. And these are the steps you will need to start export business in India.

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