How to Start an Import-export Business

Last Updated at: Oct 30, 2020
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udyog aadhar
On 31st August 2020, the Ministry of Commerce issued a notice regarding the procedure and criteria for exporters to apply for an export licence for shipments of N95/FFP2 masks. According to this, online applications filed by such exporters only from September 7 to 9 will be considered for granting export licence by the Directorate General of Foreign Trade (DGFT).

 

Starting an Import-Export business needs proper guidelines and understanding of the foreign market. It is also important for you to obtain all the necessary import-export data in matters associated with foreign trade agreement. Before starting any business in India, you have to obtain an importer-exporter license.

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The Import Export Code (IEC) is registration number for conducting business. So, after the business registration, you have to apply for the IEC, which is a 10-digit code that is issued by the Director General of Foreign Trade. Click here to find out how to obtain the IEC Obtaining the IEC in your own name would make you a sole proprietor. This is not always the best option. Therefore, it’s best you first register your business either as a limited liability partnership (LLP) or a company:

LLP: LLP registration is best way to doing the business when you have partners but want to enjoy the features of a company. In an LLP, the most important feature is the limited liability in the firm.

Private limited company: It is the most popular business formation in India. Most big importers and exporters opt for this registration because you can easily raise funds through investors by divesting stake instead of taking bank loans. The other great feature is the limited liability in the business. VAT and CST (sometimes known as Sales Tax or TIN Registration) is required for selling the goods in India for retailers and manufacturers. Therefore, you have to apply for the VAT registration from your state government in case you will also be selling within the country.

Lastly, you need to appoint an expert customs clearing agent. He will be able to assist you in clearing the batch at the port. Calculating numerous expenses at the port is also important, which is the responsibility of an agent. These expenses include handling charges, customs duty, and transportation charges.

A freight forwarder or forwarding agent, also known as a NVOCC (non-vessel operating common carrier), is a person or company that manages and organises point-to-point shipments for individuals or corporations to import goods from the manufacturer abroad to your location.