Discover the essential steps for launching an import-export company in India with this comprehensive guide. The rise of e-commerce and the Internet has significantly impacted global trade, leading to an increased interest in establishing import-export businesses.
What Exactly is an Import-Export Company?
An import-export company plays a pivotal role in the global trade ecosystem by facilitating the exchange of goods and services between countries. It serves as an intermediary, connecting producers and consumers from different regions. Essentially, these companies engage in the purchase of goods from foreign markets for resale in the domestic market (import) or the sale of domestically produced goods to international buyers (export).
Example of an Import-Export Company
For instance, an Indian import-export company may import electronic gadgets from China for distribution within the country,in order to meet local demand. Conversely, the same company could export Indian-made textiles to international markets, contributing to the global trade network.
Import-export businesses leverage their expertise in international trade regulations, logistics, and market trends to foster cross-border transactions and enhance economic connectivity.
Documents Required for an Import-Export Business
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Company Registration Certificate
A legal document that ascertains that a business or an organization has been registered as a business, explaining the terms of business and incorporation.
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PAN Card
A PAN card is a financial ID that monitors a person or a company’s tax-related transactions, through a single Permanent Account Number.
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Current Account Number
A current account is a bank account that is maintained and only used for business.
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Import Export Code (IEC)
IEC refers to the import-export license issued by the Government of India. A 10-digit code issued by the Director-General Of Foreign Trade (DGFT), Department of Commerce.
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Registration Cum Membership Certificate
RCMC is issued by the Exports Promotional Council (EPC) to the exporter. It certifies that the exports are government-approved products.
Set Up your Import-Export Business with Vakilsearch
Establishing your import-export business in India involves several crucial steps:
- Company Registration: Engage legal professionals to register your business, choosing between a private company, partnership, or sole ownership, based on your business model.
- PAN Card: Obtain a PAN card for your business. You can either use your existing PAN card or apply for a new one issued by the Indian government.
- Import Export License (IEC): Acquire a 10-digit Import Export Code (IEC) from the Directorate General of Foreign Trade (DGFT). This license is mandatory for initiating import-export operations.
- Registration Cum Membership Certificate (RCMC): For the export aspect, obtain an RCMC from one of the 26 Export Promotional Councils (EPCs) in the country. This certificate, issued by the EPC, validates the credibility of the exported goods.
- Bank Account: Open a dedicated current account for your business transactions, complying with Reserve Bank of India (RBI) regulations.
Reasons Why You Can Make a Lot of Money With an Export Business in India
Embarking on an export business in India can be a lucrative venture for several reasons:
1. Unique and In-Demand Products: India produces a plethora of distinctive products highly sought after worldwide. From gems and jewelry to fruits, vegetables, snacks, and premium fabrics, the global market has a significant appetite for Indian goods.
2. Global Appeal: The love for Indian products spans across the globe, driven by factors like immigration and the increasing embrace of multiculturalism. This results in a consistent demand for Indian exports.
3. Government Support: Recognizing the pivotal role of export businesses in driving economic growth, the Indian government has instituted various programs to support and assist exporters. This proactive approach simplifies business processes and encourages financial success, fostering the growth of export enterprises.
4. Financial Incentives: The government’s support translates into financial benefits for exporters. With easy accessibility to business facilitation and financial aid, export businesses are motivated to enhance and expand their operations.
5. High-Quality Products and Low Costs: India’s exports gain a competitive edge due to the high quality of its products, coupled with the cost-effectiveness of labor and other associated expenses. This combination enhances the attractiveness of Indian goods in the global market.
As a result, initiating an export business in India not only taps into the innate demand for unique Indian products but also benefits from government initiatives and cost advantages, making it a potentially profitable endeavor.
Types of Import-Export business
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Export Trading Company (ETC)
ETCs operate by finding domestic entities that can provide international buyers with what they are looking for, and exporting it to these foreign entities.
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Export Management Company (EMC)
EMCs act as facilitators for hire, for export companies. They put the entire operation together on behalf of the export company (including finding buyers, distributors, arranging logistics, etc), and are compensated for their services.
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Import/Export Agents
Agents are essentially free agents who buy from domestic/foreign manufacturers and then resell the goods to businesses around the world.
Export Promotion Schemes Launched by the Government
The Indian government has introduced several Export Promotion Schemes to boost the country’s export sector and encourage businesses. One such initiative is the Trade Infrastructure Export Scheme (TIEC), launched in the financial year 2017. This scheme provides financial assistance to businesses through support from both the Central and State Governments. Businesses can avail financial aid for infrastructure projects, with a total of 28 projects benefiting from this scheme between 2017 and 2019.
Additionally, the Government of India is dedicated to fostering an international trading environment within each state, aiming to create a conducive atmosphere that stimulates increased exports.
The Director-General Of Foreign Trade (DGFT) administers various export promotion schemes, including:
1. Advance Authorization: This scheme allows businesses to import inputs without payment of duty, facilitating cost-effective production for export purposes.
2. Export Promotion of Capital Goods: Encouraging the export of capital goods, this scheme provides incentives to businesses involved in the export of such equipment.
3. Duty-Free Import Authorization: Businesses can import specified goods without paying customs duty, promoting export-oriented production.
4. Merchandise Exports from India Scheme (MEIS): This scheme incentivizes the export of specified goods to specified markets by providing duty credit scrips to exporters.
5. Services Exports from India Scheme (SEIS): Focused on promoting the export of services, SEIS provides rewards to service providers based on their net foreign exchange earnings.
Top-Performing Import Industries in India
- Mineral fuels including oils
- Gems & precious metals
- Electrical machinery & equipment
- Machinery & computers
- Organic chemicals
- Plastics
- Iron & Steel
- Oils
- Medical equipment
- Inorganic Chemicals
Top- Performing Export Industries in India
- Mineral fuels, including oil
- Gems & precious metals
- Machinery & computers
- Vehicles
- Organic chemicals
- Pharmaceuticals
- Electrical machinery & equipment
- Iron & Steel
- Cotton
- Clothing & Accessories
Conclusion
The leading import-export industry participants in India, including Reliance, TATA Steel, Sun Pharma Industries, Bajaj Private Limited, and Arvind Mills, started their ascent to success in this manner. If you want to play in the same league as them, you must be extremely intelligent and knowledgeable about the import-export industry.!
Though setting up an import-export firm with all of its permits, regulations, and formalities seems intimidating and difficult, the results are worth the trouble. However, the expert at Vakilsearch can help you go through the entire process with ease.
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