Exporting products means selling products from a local country to a foreign country. The word export is generally used when there is a business between two countries. Export is one of the important reasons for the growth of a nation. It is the source of income for many people and the government too.
Exports help in earning profit and contribute to the economic growth of the country. We are here to give you tips on how to start an export business in India.
Decide on what to export
The first thing to do to start an export business is to decide on the products you wish to export. You can choose the products based on your choice or feasibility study. You can only be successful in the exporting business when there is a demand for your products in the country you would be exporting. If the demand is higher for your products, then you can get higher returns as well. Products like rice, vegetables, fruits, medical equipment, textiles are profitable items that can be exported from India to other countries.
Where will you export
After making up your mind on what products to export, the next thing you need to decide is where to export your products. If you want to earn a high return for exporting your products then make sure you choose to export to a country that has a higher per capita income. It will help you sell your products with better margins. Another thing to consider while choosing the country to export your products is the demand for your product should also be high.
You can consult the experts or people who visit the country to know which product is in demand in those countries. You can export your products to countries like Saudi Arabia, UAE, Iran, Australia, Malaysia, etc. These countries import various products from India like Rice, vegetables, garments, spices, and more.
Choose the type of business entity
Before starting an export business, you need to decide the form of the business entity. The form of business will depend on the structure of the ownership. After you select the type of business entity, get registered your business. You can form a business entity based on your choice. You can choose to form a sole proprietorship, partnership firm, and LLP. You also need to make a selection between a Private Limited Company or a Public Limited Company.
Documents needed to start an export business in India
Documents are the essential thing you will require while starting any business. Choose a catchy name for your business and get the logo designed for your business. Get your rule book and complete all the other formalities. You need to get registered with your company into the GST regime for payment of tax purposes. You also need to register yourself as income paying tax citizen of the country.
Following are the document needed for starting your export business:
Before starting your business, make sure you get yourself a pan card. If you choose to run your business under sole proprietorship, your pan card can is needed to start your business. If you are starting your business as a company then, you must get a company pan card from the income tax department.
GST Registration Number
Get GST registration for your business. You can do it online by visiting the GST site. You need to provide details like Aadhar card, Pan card, Residential proof, photo, and bank account, and more.
You need to open a current bank account from any bank of your choice. Your business will need separate bank account transfer funds. If you choose to run a big business, then you may also need to open bank accounts in international banks.
Import Export Code
You need an Import Export Code to export your products to other countries. You can generate this code from the Direct General of Foreign Trade. You will get a ten-digit code, which is essential for importing and exporting products between two countries. The Import Export Code comes with lifetime validity. This code is essential for importers while transferring money. Exporters need this code while sending shipments. Banks also need this code to either accept money from abroad or send money abroad. It is also beneficial while passing shipments through customs. It is important to have this code when you are starting an export business. You must wait around 7-10 days to get an Import Export Code.
Documents needed for import export code:-
- Individual pan card in cases of proprietorship and pan card of the company in case of company.
- Photographs of the applicant.
- Canceled cheque of business’s bank account
- Application fee
Get an office space
You will need separate office space to run your business. Based on the number of employees and other requirements you can choose to rent or buy space for your office. If your budgets are insufficient to buy a place, then renting a place will right option for you. However, you need a separate office address to run your business.
Analysing target market
When you are exporting products abroad, you must be aware of the market size, competition, quality requirements, and payment terms of the importing country. Learn about the export benefits available in certain countries under the Foreign Trade Policy. Agencies like Export promotion agencies, Indian Mission Abroad help understand the initial market. They also help in expanding it.
Finding buyers and online presence
You need to have a product catalog, Price, Payment terms and other related information ready for prospective buyers. Create your website and place all this information on the website. You can also print offline catalogs for potential customers.
As your customers are from other countries, you can also consider creating a multilingual website to reach out to more customers. Don’t forget to include an introduction about the main people in the business on the website with the catalog. It will help the potential customer to know about you and how to contact you.
Make sure you provide online order giving options and feedback set up for your customers. It would be a great idea to be on various social media platforms so that customers can ask their queries. You can also list your business in online marketplaces like Amazon.com, Alibaba.com, and others to connect with customers from different parts of the world.
For offline, you can reach potential customers at buyer-seller meet and exhibitions, trade fairs, etc. Export Promotion Councils, Overseas chambers of commerce can also help reach out to customers offline.
Minimum investment for export business
No matter how well you plan your export business, you can not get your business off the ground without any initial investment. First, estimate the finances you will need to start an export business in India. Then you decide the type of export financing that would be suitable for your export business. Decide between short-term or long-term finances based on your business requirement. You can have access to subsidies from the government for your exporting business.
Minimum investment of around 2 lakhs is required to start an export business. 30% of the minimum amount will be used for the business registration and remaining 70% for marketing.
Provide a customized sample of your product to foreign buyers on their demand. It will help in getting orders from them. Export of samples of certain products is free exportable without any limit.
Pricing and costing
Product pricing is one of the crucial parts of getting customers for your business. It also affects sales in international competition. While fixing the price for a product, take consideration of all the expenses. From Sampling to the realization of export proceeds, everything should be considered while pricing the product.
You must establish export costing in such a way you can sell a maximum quantity of goods at a competitive price and can earn maximum profit margin.
Get authorised dealer code
There are three means by which you can export your products to different countries such as sea, air, and road. You must get yourself registered at the route by which you will be exporting your products. In the case of sea, you need to get registered at air customs. Similarly, in the case of sea, get registered at the seaport and road customs in case of a road.
Get registered with Central Excise Department
Excise tax is levied on various duties. You can avail of many benefits when you export certain products. To avail of the benefits, you must get registered yourself at the Central Excise Department.
Get registration cum membership certificate
Government supports exporters in many ways who export certain products. The government encourages them by supporting them in various ways. They also offer financial support in case of need. You need to get yourself registered to RCMC to avail those benefits. You also need to get a certificate from a particular authority based on the products you export. Those authorities include APEDA, CEPA, CHMEXCIL, etc.
Appoint a house custom agent
You need to appoint a licensed person as a House Custom Agent to do transactions related to import and export at the customs office. A House Custom Agent will make work easier for you as it will eliminate the requirement of placing your man at the station while exporting your products. There are more benefits in appointing CHA which you will learn after appointing him.
Tie up with importers in other countries
If you have to export your products, you need to make deals with the importers of other countries. You can do this one-on-one. You can do this with the help of a third person. There is a various portal available both online and offline from which you can develop contacts for your exports. To build contacts with the importers in the other countries, you need to visit the country and meet with the people associated with the business. You must develop contact with people like an export agent, officials, and more. They will help in creating better opportunities for you.
Join groups related to the niche of your export
As I have mentioned above, you can make contacts and join groups for better opportunities in a similar area of your business. It is always better to have a wide range of options. It will also help in increasing your profits. These groups are an independent group that helps each other for mutual benefits. Sometimes profits are unpredictable, so it is always better to associate with people.
Hire an expert
There are other issues you may face apart from the ones which we have mentioned. Sometimes you may go blank and do not know what to do. In that situation, you will need a piece of advice from an expert who is well versed with imports and exports. Hiring an expert has other benefits like saving taxes, reduction in payment of export charges and maximizing profits, and more. Hiring an expert will help in finding better opportunities for exporting your products. It will directly increase the profit margin. It will also expand your export circle.
Get your risk covered through ECGC
Dealing with international clients involve risks from the insolvency of customers or countries. You can cover your payment risks through ECGC. The Export Credit Guarantee Corporation Ltd. is owned by the government of India. It is established under the Ministry of Commerce to provide export credit insurance support to the exporter in the country.
In the end, the importance is growing your export business with time. Rules and regulations change with time, so you must be up to date. If you want to survive in this competitive world, you must be tech-savvy and digitalize your business operation.
Follow the above guidelines and do extensive research and be ready to start your export business in India.