Exporting goods from one country to another is one of the business catalysts to grow businesses. But is it that easy to incorporate exporting into a business? Or is it mandatory to start exporting from a business? This blog post explains the most exported products from India and the advantages & disadvantages of exporting in India. Continue reading to know more.
Most Exported Products From India
Embarking on the journey of exporting goods from one country to another is often seen as a catalyst for business growth. However, the integration of exporting into a business is a multifaceted process that requires careful consideration. In this blog post, we will explore the most exported products from India, shedding light on the advantages and disadvantages of venturing into the realm of exporting.
Most Exported Products From India: Beyond Spices
When we think of Indian exports, spices naturally come to mind. However, the landscape is far more diverse. India stands as the largest exporter of various products, including:
- Iron, Steel: $21.2 billion (5.4%)
- Gems, Precious Metals: $38.2 billion (9.7%)
- Mineral Fuels, Including Oil: $56.4 billion (14.3%)
These statistics underscore the extensive range of goods that contribute significantly to India’s export economy. While exporting holds immense potential, is it as straightforward as domestic sales? The answer is a resounding NO.
Navigating the Complexities: Advantages and Disadvantages of Exporting in India
Advantages of Exporting
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Diversification of Markets
Exporting allows businesses to tap into international markets, reducing dependence on a single market and providing exposure to a diverse range of consumers.
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Increased Revenue
By reaching a global audience, businesses can experience a substantial increase in revenue. International sales contribute to the overall financial health of the company.
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Competitive Edge
Establishing a presence in the international market enhances the company’s competitiveness. It fosters innovation, quality improvement, and adaptation to global industry standards.
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Economic Growth
Successful exporting contributes to the overall economic growth of the country. It strengthens the nation’s trade balance and fosters a favorable economic environment.
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Brand Recognition
International exposure not only boosts sales but also enhances brand recognition. It establishes the business as a global player, instilling confidence in both domestic and international customers.
Challenges of Exporting
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Extra Investment
Exporting often requires additional investment in marketing, compliance, and administrative expenses. Up-front costs can be substantial, impacting the payback period.
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Financial Risks
Economic downturns in the target country, currency fluctuations, and invoice management pose financial risks. Credit insurance becomes essential to mitigate risks associated with non-payment and currency issues.
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Product Modification
Adapting products to meet the safety and security standards of the target country is a meticulous process. It involves modifications to ensure compliance, adding complexity to the exporting process.
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Documentation Burden
Exporting involves extensive documentation, surpassing the complexities of domestic sales. Obtaining an export license is a mandatory task, demanding meticulous attention to detail.
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Remote Relationship Management
Building and maintaining reliable contacts overseas is crucial for successful exporting. Managing relationships across borders adds an additional layer of complexity.
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Managing Multiple Currencies
Dealing with multiple currencies introduces complexities in payment processes. Currency fluctuations and exchange rate management can impact the financial aspect of exporting.
Exploring India’s Top Exports: Insights from 2021
In 2021, India’s top exports included refined petroleum oils, diamonds, dosage-mixed medications, jewelry, and rice. These diverse exports accounted for nearly one-third (29.4%) of India’s total export earnings. The expansive range of commodities illustrates the diversity and strength of India’s export portfolio.
The Road to Success: Secrets Unveiled
If a business successfully navigates the challenges associated with exporting, it stands to gain several advantages:
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Global Visibility
Exporting attracts attention from a wider international audience, establishing the business as a global player. This visibility contributes to both international and domestic sales.
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Seasonal Sales Balancing
International sales provide a buffer against seasonal fluctuations, balancing challenges posed by non-seasonal domestic sales.
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Lower Production Costs
With increased profits from exporting, businesses can achieve lower production costs per unit, ensuring smoother production processes.
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Financial Gain
A well-nurtured international market, coupled with effective marketing strategies and a solid legal foundation, leads to increased profits for the business.
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Enhanced Business Knowledge
Managing remote relationships and navigating a new market deepens the understanding of the exporting journey, opening avenues for further business expansion.
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Building New Relationships
Exporting fosters the development of strong and reliable relationships with international partners, strengthening the business’s global position.
Conclusion: Navigating the Exporting Terrain
Expanding a business through exporting is a meticulous and challenging task that goes beyond the core functions of a business. It involves considerations of legal frameworks, marketing strategies, product development, and remote relationship management. Balancing attention across these dimensions is complex, emphasizing the need for expertise in each department.
Legal experts at Vakilsearch offer businesses a clear legal roadmap to implement your exporting dream. Click here to get started with import-export code registration!
FAQs on Exporting Business
What is IEC?
Import & Export Code (IEC) is a unique 10-digit alphanumeric code issued by the Directorate General of Foreign Trade (DGFT). It is presently the same as an individual's or organization's PAN number.
Who can get IEC?
Any individual or company looking to enter international business can obtain an IEC.
What is the basic requirement to get IEC?
1. Valid registration of the firm.
2. Valid PAN registration.
3. Valid mobile number and email id.
4. Valid bank account in the name of the individual/firm.
5. Valid digital signature (Class 2 or Class 3).
Who Issues/How to apply/fee?
1. IEC is issued by DGFT.
2. Application is done through the DGFT portal.
3. The fee is Rs 500, payable online.
Is IEC required for Service exporter?
IEC is not mandatory for service exporters unless they want to claim benefits under the Foreign Trade Policy.
Who are the Regulatory bodies for international trade?
Director General of Foreign Trade (DGFT): Formulates foreign trade policy/procedures.
Central Board of Indirect Taxes & Customs (CBIC): Monitors physical movement of goods and implements trade policy decisions.
RBI: Regulates remittances for imports and monitors export realization.
What are export promotion councils and their role in international trade?
Export promotion councils assist and support manufacturing exporters and traders for specific commodities. They provide market information and assist in global product marketing.
Is it mandatory for exporters to register with EPCs?
Registration with Export Promotion Councils (EPCs) is mandatory for exporters of certain products like agriculture, dairy, and marine products to claim benefits under the Foreign Trade Policy.
What are ITC (HS) codes?
Indian Trade Classification (Harmonized System) codes classify all commodities for export/import into groups at 2/4/6/8 digits. These codes are issued by DGFT.
What are the mandatory documents required for Export/Import?
For exports: Bill of lading/airway bill, commercial invoice cum packing list, shipping bill. For imports: Bill of lading/airway bill, commercial invoice cum packing list, bill of entry.
What are the other/additional documents required for Export/Import?
Certificate of Origin, Certificate of Inspection, Phytosanitary certificate, Health certificate, and other specific documents depending on the commodities.
What are INCOTERMS?
Incoterms are international commercial terms that define the roles and responsibilities of exporters/importers in a trade transaction. INCOTERMS 2020 is the current version.
Which are the most commonly used INCOTERMS in transactions?
EX Works
FOB (Free on Board)
CIF (Cost/Insurance/Freight)
What is Certificate of Origin (Coo)?
A Certificate of Origin establishes evidence of the origin of goods from the exporting country.
How many types of Coos are there and who issues them?
There are two types: Non-preferential (issued by EPCs/chamber of commerce/VTPC) and Preferential (issued by FIEO/EIC/DGFT for bilateral trade agreements).
What are some commercial terms in international trade?
Advance payment
DP terms (Documents against Payment)
DA terms (Documents against Acceptance)
Letter of credit
Open terms
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