The Foreign trade sector has gained a lot of popularity in India and has attracted various people to set up their businesses in the export-import industry. The foreign trade sector is the new hot destination for new investors.
Starting a new trading business can be a tough and challenging job. The new entrepreneurs who are entering the world of the trading industry have hundreds of questions to be asked, ranging from the legal guidelines to the documentation required. This information available on the internet is limited and does not resolve all the queries of the new investors. This article will guide you on how to start an import-export business in India.
What is an import export business all about?
An import-export business is a business that involves the exchange of goods and services between domestic and foreign companies. To know more about import-export, read this article on How to start an import-export business in India.
Documents required for an import-export business:
The essential thing in How to start an import-export business in India is the list of documents required. Certain necessary documents are required for starting up with the import-export company.
These documents are:
1. Get a PAN Card – Obtaining a PAN Card is the most important and vital document that is required for the setting up of an import-export business. Every business has to apply for a Permanent Account Number (PAN) with the Income Tax Department.
2. Open a current account – A bank account that is used by businesses is termed as a current account. Before starting the import-export trade, the creation of a Current Account is necessary.
3. Obtaining the IEC Code – An Import-Export Code (IEC) is necessary for every trading business and is obtained from the Director General of Foreign Trade (DGFT). It is a 10 digit code required to perform the import-export activities. More information regarding IEC can be found out on https://www.dgft.org/iec_code.html.
4. Obtaining RCMC – The Registration Cum Membership Certificate (RCMC) is mandatory for all the trading businesses who wish to start their business. Export Promotion Council (EPC) issues RCMC. This RCMC is valid throughout the world and is received within a week of registration. RCMC acts as a certification for the products that are being imported and exported.
How to set up your export-import business?
Step 1: Getting your company registered
The first step is to get your company registered. To facilitate this registration process, you can hire professionals. Depending on the type of company, you can register your company as a partnership firm, a private company, or sole proprietorship with the government of India.
Step 2: Pan Card generation for your business
The second step after registering your firm is to get a PAN card generated for your business by the government of India. You can use your existing PAN Card or also get a new PAN Card for business made.
Step 3: Getting an import-export license
As discussed above, this is the 10-digit IEC number issued by the DGFT. An import-export business cannot start without getting issued an IEC number.
Types of Import-Export businesses:
1. Export Trading Company (ETC) – Export Trading companies look for firms who indulge in exports. ETC also helps manufacturers in looking for buyers overseas.
2.Export Management Company (EMC) – Export Management Companies act as a facilitator for performing exports by the export companies. EMC puts in all the functions together that was supposed to be completed by the exporting company.
3.Import/Export agents – Import and export agents act as an intermediary for the foreign and domestic firms that buy products and indulge in resell activities.
Schemes launched by the government for export promotion:
In this article, when you are learning about how to start an import-export business in India, it becomes vital to know about the various schemes launched by the government for export promotion in the country. Following are some of the programs launched by DGFT to help trading businesses to grow:
- The Trade Infrastructure Export Scheme (TIEC)
- Export Promotion of Capital Goods
- Duty-Free Import Authorization
- Merchandise Exports from India Scheme (MEIS) and
- Services Exports from India Scheme (SEIS)
Best 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
Best 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 export-import market in India is growing at a very rapid pace, which has increased the amount of competition in the market. Thus, setting up an import-export business can be quite challenging. Also, before starting any business, it is essential to know about the rules and regulations of that business. We hope that we were able to answer your question about how to start import-export business in India. Best of luck with your new adventure!
