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How To Start An Import Export Business In India-Minimum Investment, Documents Required

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How To Start An Import Export Business In India

How To Start An Import-Export Business in India: The import and export business has grown; thanks to the democratisation of business opportunities made possible by eCommerce. With so many countries now able to transact with each other, small companies have joined in too, making it easy to do business globally. Recently, we have seen an increase in the import and export of both goods and services. Entrepreneurs are taking advantage of this changing business landscape by starting up their very own import and export ventures.

But before you join in on this thriving industry, there are some steps that every entrepreneur considering a similar idea should know about first. This way, you’ll be better prepared for the challenges involved as well as plan for any potential tax implications associated with doing what you love. And here is a detailed post that helps you to understand everything about how to run an import/export business in India. Scroll down to find out more.

Table of Contents

Import and Export Business in India

Any company that exchanges goods and services internationally and delivers the products across the world is known as an import-export business. In other words, export refers to the movement of goods and commodities from one’s home country to the markets of another, while import refers to the movement of goods and commodities from one’s home country to the markets of another.

So, now you should have an overall idea of the import-export business in India. Due to the high economic policies that have stimulated growth in this sector, small and medium-sized entrepreneurs are starting this type of business from home or in small offices.

Types of Import and Export Business in India

There are three types of import and export businesses in India, namely: export trading companies, export management companies, and import and export agents. Now let us understand how all these import and export companies work in India.

  1. Export Trading Companies: An export trading company works by identifying local companies that can give international customers what they’re seeking and then exporting it to them.
  2. Export Management Companies: These companies operate as hiring facilitators for export companies. They are paid for putting together the complete process on behalf of the export company (including locating customers, distributors, and organising logistics, among other things).
  3. Import/Export Agents: These are essentially free entities that purchase items from domestic and international producers and resell them to firms all over the world.

How to Start an Import-Export Business in India?

In this section, we will discuss how to run an import-export business in India, including the list of documents required, the registration process, and investment money details. The detailed step-by-step procedure to run an import-export business in India is given below:

1. Understanding the Import/Export Business

The first step toward starting an import-export business is to understand how this business runs and how the owners are gaining profits out of it. Also, as discussed earlier, we know that there are three types of import-export business names: export trading companies, export management companies, and import/export agents. Thus, it is important for you to choose an import/export business that fits your capacity.

2. Choosing an Import-Export Category

Once you have chosen the type of import-export business, the next step is to choose the material or category that you would like to import or export to India. Before choosing the category in which you import or export, do careful research, such as determining which industry is performing well in this market, which business will suit your knowledge and so on. Once you choose the niche that you would like to import and export, you can get going with this business. And to help you with top industries in India, here is a table which outlines the top import and export businesses in India.

Top Import Industries in India

The list of top imported industries in India is tabulated below:

S.No Top Import Industries in India
1 Chemical Fertilizers
2 Crude Petroleum
3 Electrical Machinery and Equipment
4 Gold
5 Nuclear Reactors, Boilers, Machinery and Mechanical Appliances
6 Organic Chemicals
7 Pearls & Precious and Semi-Precious Stones and Jewellery Items
8 Plastics, Plastic Articles

The Top Export Industries in India

The list of top export industries in India is outlined below:

S.No Top Export Industries in India
1 Clothing and Accessories
2 Electrical Machinery, Equipment
3 Iron Steel
4 Machinery including Computers
5 Mineral Fuels including Oil
6 Pearls & Precious and Semi-Precious Stones
7 Pharmaceuticals
8 Vehicles, Parts and Accessories

Now that we have provided the top import and export industries in India, Since you are planning to start an import and export industry business in India, you can choose an industry that is performing well in the market to scale your profits.

3. Gathering the Documents Necessary for Import/Export Business

Once you have chosen the niche in which you would like to run your import-export business, the next step is to gather all the necessary documents to make your import-export business legal. The list of documents that one will have to have to register an import-export business is as follows:

  1. Business address proof
  2. Business plan
  3. Company registration certificate
  4. Details of the bank’s current account, ITR, sales tax, etc.
  5. Financials—certified and audited by CA
  6. Import-export code (IEC)
  7. Income proof and deceleration documents
  8. KYC documents of the owners, partners, and co-applicant, if applicable
  9. The applicant’s, or a business partner’s, Pan card
  10. Passport-sized photographs
  11. Proof of hired freight forwarding company
  12. Registration, as well as a membership certificate, are issued to the exporter by the export promotion council (EPC).

Note: You might not have all the documents mentioned in Step 3. In the coming sections, we have mentioned how to acquire all the documents that are mentioned in step 3.

4. Incorporating Your Import-Export Company in India

Once you have all the necessary documents in your hand, the next step is to make your company legal. This means that you have to register your import and export business in India. Firstly, you have to register your company with the government of India. There are basically four types of company registrations, viz., sole proprietorship, in partnership, private limited company, or LLP. Choose the registration type that is suitable for your business. You can hire a lawyer to register and make your import and export business legal. Along with company registration, you will also have service tax registration and a VAT registration certificate.

5. Establish a current bank account

To run your business’s financial dealings, such as sending and receiving funds, you will have to open a bank account. Business owners will have to open a current bank account instead of a savings bank account.

6. Obtain an Import Export Code (IEC)

Once your company registration is done, you will have to apply for an Import/Export Code. The IEC code is issued by the government of India and all import and export business owners will have to have the IEC code to run their business. To apply for the Import Export Code, one will have to visit the official website of the Director-General of Foreign Trade (DFGT), Department of Commerce, Government of India.

The DFGT website will have an online application form where you have to fill in the necessary details. Based on the documents submitted and the application form, the officials will issue the IEC code to the individuals.

7. Apply for Registration-cum-Membership-Certificate (RCMC)

Once you get your IEC (Import Export Code), you will have to apply for a Registration and Membership Certificate, which is commonly known as the RCMC. The RCMC certificate is issued by the officials of the Export Promotion Councils. One can easily get the RCMC certification from any of the 26 export promotion councils. Once you have accomplished all the 6 steps, you can easily obtain the RCMC.

8. Product Pricing

The mark-up from the base price of the items obtained from the supplier or local manufacturer should be included in the product cost. A company owner must maintain a margin or commission of at least 10%–15% before selling it to clients, just as a supplier has already included his or her commission in the price of the item sold. The margin percentage or commission will differ from trader to trader and will also be determined by the sort of goods and commodities involved.

9. Hiring an E-Commerce Firm

Owners who are starting an e-commerce company in India will also have to hire a logistics company. The main objective of hiring a logistics company is to deliver your products to customers across the world. Out there, there are many courier aggregators or logistics companies. You will have to hire someone who has the cheapest shipping charges to deliver your products worldwide.

10. Speak with a Customs Clearing Agent

You may require the help of a customs clearing agent, who can advise you on the process of having your goods cleared at ports, customs duty costs, transportation charges, and other aspects of the import-export company.

Top Import and Export Countries in India

Now that we have provided all the detailed steps on how to complete an import-export business in India, The next step is to know which countries you want to export or import the goods to. Though there are many countries around the world, here is a list of countries that stand tall in the import and export business in India.

Top Import Business Countries in India

The top countries for importing business to India are as follows:

  1. China
  2. Hong Kong
  3. Indonesia
  4. Iraq
  5. Japan
  6. Russia
  7. Saudi Arabia
  8. Singapore
  9. The United Arab Emirates
  10. The country of the United States of America

Top Countries for Business Exports in India

The top countries for export business in India are as follows:

  1. Bangladesh
  2. China
  3. Germany
  4. Hong Kong
  5. Malaysia
  6. Nepal
  7. Singapore
  8. The United Arab Emirates
  9. United Kingdom
  10. The country of the United States of America

Now that you have been provided with all the necessary information on how import and export businesses are operated in India, When it comes to international trade, India has seen a rapid awakening in recent years as the abundance of online platforms has made doing business across borders as simple as the click of a button. But now that these channels have broadened the market, we realize there is perhaps even more room for growth! So make sure you keep an eye on new ways that might be opening up soon, especially since there’s quite a lot of potential lying untapped at this moment! With globalization taking shape and having truly taken off with the prevalence of eCommerce, it’s no surprise that demand for both importing and exporting goods has flourished. A lot of small-scale entrepreneurs are just starting their businesses from home offices or even smaller shops.

Thus, if you are a person who is looking to start an import-export business in India, take up the points provided on this page to start your business with flying colors.

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