In the new millennium, global trade is a booming industry. It is not, however, a brand-new concept. In the middle ages, caravans delivered silks and spices. Seeds and salts were in low supply and in high demand on a regular basis. People were anxious to get their hands on these treasures and would travel or pay others to do so. Thus began the history of international trade.
In India, trade has a significant impact on GDP, accounting for 37.87% of it. Exports from India are expected to rise rapidly over the next decade, thanks to the Indian government’s vigorous promotion of manufacturing in India through programs such as Make in India. So, if you are planning to launch an export startup in India, here is a step-by-step approach to setting it up.
The Initial Steps:
- Develop a business strategy
It is critical to create a business strategy and a plan of action before launching any export startup in India. Factors that play a major role in your export-import business planning are:
- Choosing the correct export product or service – Although the list of products that can be exported is extensive, there are some products that cannot be exported. Make sure yours is not one of them. Since India is recognized for its agricultural exports, picking one of them is an excellent option. These products can be sourced locally and exported. In addition to receiving future orders and reviews, the quality of the product is also a very important factor.
- Cost estimation – One has to consider Input cost, working capital needed, long-term capital needs (loan or equity).
- Research – Both market and customer research.
- Logistics – How to source raw materials and how to deliver finished goods.
After gathering the above information and estimating profitability, the entrepreneur can begin the operations required to get the relevant registrations and licenses.
- Registration of your export-import business
Choosing and registering the business entity is the next step in your plan of action for establishing an export startup in India. When starting an export firm, it is recommended that the entrepreneur form a private limited company. The promoters of a business can benefit from limited liability protection, transferability and easy access to bank loans, among other benefits. Furthermore, working with a registered corporate organization in India is preferred or required by overseas consumers or clients. The majority of proprietorships and partnership firms are classed as unregistered businesses. As a result, forming a private limited company is required when launching an export firm.
The current economic scenario in India is favorable to exporters. So, if you are thinking of starting your own export-import company and need some assistance, we are here to help. At CoffeeMug, we pair each member with the right people who have the necessary talents to assist them on their path to success.
- Registration for taxes
Get a tax registration in the name of the business entity after completing the business registration process. For any new business, the PAN (Permanent Account Number) is the first tax registration required. After getting a PAN, a company can open a bank account and begin the process of obtaining a loan, purchasing equipment or purchasing raw materials; all of which are necessary to start a business.
- Obtain an IEC number and an RCMC
According to India’s Foreign Trade Policy, an exporter or importer must obtain an IEC number. It is a crucial company identification number that may be obtained by going to the DGFT website and filling out an online application.
The RCMC (Registration Cum Membership Certificate) acts as proof that your company has been registered with the council or board, and it is useful for applying for incentives or concessions under the Foreign Trade Policy, like duty drawbacks or duty credit scrips. RCMC membership certificates are issued by Export Promotional Councils (EPCs) or Commodity Boards of India and are valid for five years.
- Online presence and buyers
To build a robust export startup in India create a comprehensive product catalogue. As your target market is from another country, you might want to consider developing a multilingual website to reach a wider audience. Aside from the catalogue, make sure your website includes an introduction to the company’s key personnel. This can assist potential clients in learning more about you and how to contact you. You can also put up an online order form, as well as an email or feedback system so that clients can contact you with trade inquiries. When it comes to online marketplaces, well-known companies like Amazon.com, Alibaba.com and other B2B as well as B2C portals allow exporters to list themselves as vendors on their websites and interact with buyers all over the world.
Export business ideas in India
To help you plan your next step in the import and export world, let us take a look at some export business ideas in India that will help you establish your own export business.
Indian jewellery has a global following and the sector has enormous potential. Every Indian is enticed by the beauty of ethnic jewellery, especially when they are away from home. In fact, jewel-obsessed foreigners never miss an opportunity to showcase their Indian adornments. You can sell your products on a direct-to-consumer (D2C) website or on international marketplaces.
Handicrafts is an excellent export business idea in India. Indian handicrafts are highly valued worldwide. Every Indian state has its own handlooms and handicrafts. As a result, handicrafts products can be acquired directly from local artists, assisting in the establishment of job opportunities for them.
India is a major textile and apparel producer in the globe. The textile sector accounts for about 12% of India’s total export earnings. Clothes consumption will always exist and fashion will continue to evolve, which is a major factor that contributes to clothing production and export.
The pandemic of Covid-19 taught us the value of medications. We require life-sustaining equipment and specific treatments to conquer chronic diseases, which not all countries may be able to develop. As a result, pharmaceuticals are a fantastic export business idea in India. By targeting the correct market with the proper healthcare solutions, you may generate revenue.
Many goods are made with leather, including wallets, toys, handbags, belts and many others. Leather exporting has been a success story for many small and medium-sized businesses. In recent years, India has gained great prominence in leather exporting. Now is your chance!
The Next Step
The purpose of this article is to help you get started. Regardless, your next step is to learn more about areas such as sourcing materials, quality control, warehousing and obtaining financial assistance from your bank, among others.
The CoffeeMug team works with startups, business owners and innovators to help them achieve their goals by providing them with anything from incorporation services to investment advisory services. If you would like more advice on how to launch an export startup in India, we are here to help. Reach out to us now!
Q. Which product does India export the most?
A. Following are the products India exports the most:
- Engineered products.
- Products made from petroleum.
- Jewelry and gems.
- Chemicals, both organic and inorganic.
- Pharmaceuticals and drugs.
Q. In India, who issues export licenses?
A. Only the Director General of Foreign Trade (DGFT) can grant export licenses.
Q. Is GST mandatory for IEC?
A. IEC is not required for all GST-registered traders, according to the government’s most recent circular. For the purposes of import and export, the trader’s PAN shall be considered as a new IEC code.
Q. Is there a tax on exports in India?
A. Under GST, exports of goods and services are tax-free. Exporters can seek a refund of the input tax credit (ITC) for inputs and input services utilized in the export of goods and services if certain conditions are met. To claim the zero rate on exports, a bond or letter of undertaking (LUT) must be filed with the jurisdictional tax authorities at the start of each financial year. Optionally, the seller can pay tax on the output and receive a refund.