Startup

How to Setup an Import Export Business in India: A Guide for Entrepreneurs

In recent years the import export sector has seen a major growth, henceforth the demand for such businesses has gone up. With an increased demand for import export business, many startups are also getting attracted to this trend. However, not all startups excel in this field because of their unpreparedness and lack of knowledge. Therefore, you need to know all the pros and cons of engaging in this field and thereafter take a step forward. 

Introduction to Import Export Business

An entity involved in Import Export Business is a type of entity that facilitates the trade of goods and commodities between domestic and foreign grounds. We can also say that it is a type of firm that buys goods, from international markets and bring them into the domestic market for sale. Also, they ship goods available in the domestic market to international buyers.

Getting Started with your Import Export Business

In order to start an Import/export business of your own, you need to take certain steps. The procedure to follow to start an Import/export business is presented below.

Choosing a Name

Your first and foremost priority must be to form an entity. It is suggested to incorporate a Sole Proprietorship firm at the initial stage by taking a Service Tax Registration or a VAT Registration along with an attractive name and a logo.

Obtaining Necessities

When you have received the required registration, you got to have a PAN Card issued by the Income Tax Department.

After you receive your PAN Card, you need to open a Current Account with any commercial bank exclusively for your business.

One of the more important requirements to start an Import and Export business is obtaining Import Export Code (IEC) Registration. IEC is required in all cases except in case of a restricted or prohibited group of Goods or Services.

Import Export Code {IEC} can be obtained by applying online at the Directorate General of Foreign Trade {DGFT} Website. Also, you can reach us, if you need any assistance for obtaining IEC Registration.

Documents required for getting Import Export Code

You would need to have the following documents at the time you apply for getting IEC Registration:

• Personal or Company’s PAN card
• Photo of the applicant
• A canceled cheque of the company’s current bank account
• A copy of the rent agreement or electricity bill of the premise

Obtaining the RCMC

The next step to be able to import and export is to get the Registration Cum Membership Certificate {RCMC} after obtaining IEC. The Export Promotion Council^[1] grants the RCMC to the applicants. There are about 26 Export Promotion Councils from where the applicant can get the RCMC issued.

After you secure both IEC and RCMC, you are ready to start your Import Export Business. Both the IEC and RCMC are valid for all branches or business premises across India and it only takes around five to seven days to get everything done.

Opportunities for Importers and Exporters

As you know any country cannot grow without interacting with other parts of the world. Therefore Import and Export companies contribute as an integral part of India’s economy companies and serve as a media, for constant communication with the global markets. Also, there is a lot of scope for such companies as there is a constant need for importing and exporting of goods and services between countries. Also, there are a lot of avenues one can explore. Some of these are given below;

• Exploring Online Marketplaces: Today, there are a lot of online marketplaces that allow you to enlist yourself as an exporter on their site and let them connect with customers across the globe. In this case, the internet acts as a bridge for the exporters to export their products to customers sitting thousands of kilometers away.
• Exploring International Marketplaces: You must know that each country has a unique resource that can be exported, and they need the lacking resource to be imported. As an importer/exporter you should explore what you can import and the needs of other countries that lead to exports.
• Product Opportunities: You can explore for particular products such as leather items, tobacco, electrical equipment, and appliances, etc. to export or import.

Types of Import and Export Businesses

Export Management Company {EMC}: An EMC is a type of company that handles export operations for a domestic company that is interested in selling their products overseas. An EMC does all the work such as hiring dealers, invoicing customers, distributors and representatives. It also does works like handling advertising, marketing, and promotions, overseeing marketing and packaging, arranging to ship, and sometimes it also arranges finances or contracting out for developing a credit card app. 

In some cases, an Export Management Company also takes title to the goods, in essence becoming its own distributor. Usually, EMCs specialize in particular products, foreign market or both.  

Export Trading Company {ETC}: An Export Trading Company identifies what foreign buyers want to spend their money on. Then they hunt down domestic sources that are willing to export.

Import/Export Merchant: An Import/Export Merchant is generally a sort of free agent. They do not have a specific type of client base and do not specialize in any one industry or line of products. Instead, they purchase products from a domestic or foreign manufacturer and packs and then sell them on their own. 

Takeaway

Import export business is a very profitable business. You just have to muster all your necessities and get started with your business. For that, you can also take help of a good consulting company that can guide you throughout all the processes and get your company incorporated. If you wish to do so, you can contact our team at Enterslice.