The ultimate guide to starting an export business in India
30 August, 2023
An export business is when a company from one country sells its goods and services to other countries. Exports are commodities or services that are sent from your country to other countries. Conversely, when you import, you're bringing goods and services from another country into your own.
India exports several products such as diamonds, rice, non-retail pure cotton yarn, synthetic reconstructed jewellery stones and pepper. India's economy continues to grow at a steady pace, making it an ideal time for you to start an export business in India.
Tips to start an export business in India
Identify the niche
Identifying the niche and researching the market will help you understand what your competitors are doing, what consumers want, and how much they’re willing to pay for it. This will also help you determine if there is a need for your product or service in that niche.
After identifying a niche, research potential export markets. You can do this by talking with other companies that export products similar to yours or by contacting local chambers of commerce in foreign countries where you’d like to sell your products. Additionally, you may need to know the international trends in trade and apply for necessary licenses.
Increase online presence
No business can expect to succeed in today’s world without a strong online presence. Setting up a website or an online store is one of the easiest ways to start selling your products online.
You can select an e-commerce platform that offers customisation options to suit your brand identity and allows users from other countries to access it without facing any language barriers.
Creating social media profiles on platforms such as Facebook and Instagram will help increase awareness about your brand among potential customers across the globe. This will help expand your clientele, as well as make your brand more recognisable.
Obtain products from trustworthy suppliers
It is important to scout for a reliable supplier. This ensures that you only sell authentic goods and don’t risk losing customers due to a bad reputation for selling subpar products. It may also help you get better deals on your inventory and save money in the long run. Once you locate a good supplier, the next task is to persuade them to work with you.
Register as an importer
Once this is done, understanding the legal requirements will help ensure that your business gets off on the right foot. You must register with Customs and Border Protection if you wish to import products into the US from foreign vendors. As an Importer of Record, you will be responsible for filing taxes, duties and legal documents related to a particular imported shipment. You will be required to fill Importer Identity Form, commonly known as CBP Form 5106, to become an IOR.
Get a customs bond
A customs bond is a contract between customs, a principal (i.e., an importer) and a surety to ensure that all the duties and fees associated with the rules and regulations of importing or other customs activities are paid to customs by the principal. A customs bond is essentially an insurance policy against unpaid duties and taxes on imported goods.
Create a distribution and logistics plan
Now that you have all legal checks in place, you need to create a logistics and distribution plan for transporting your goods to other countries. You need to check which routes to take - sea, air, road, etc.
Air freight is used when speed is important since it takes lesser time than other modes of transportation such as ocean shipping or railroads. However, this method can be expensive due to the high fuel costs associated with aeroplanes, as well as higher labour costs related to loading / unloading cargo onto planes.
Apart from the mode of transportation, you also need to plan first and last mile transportation and the packaging of goods.
Marketing your business
Marketing your business is an important part of the export process. Once you have set up your company and established a good relationship with your suppliers, it's time to start promoting yourself.
This can be done via advertising, networking with other businesses and developing a brand image for yourself.
Getting financing
To get the financing you need to start your export business, you'll need to apply for government grants and loans. You can also find private investors who might be willing to contribute capital in exchange for equity in the company or an agreed-upon share of profits.
You can apply for HDFC Bank Low Cost Export Finance Services for a smooth and hassle-free export experience.
Keeping important documents ready
A valid business entity
Obtaining a Permanent Account Number (PAN)
Obtaining an IEC (Importer-Exporter Code) number
Registration and Membership Certificate (RCMC)
Final word
Starting an export business in India is not a difficult task. However, it does require you to be patient and diligent about the process. It is advisable that you first familiarise yourself with all the legalities before starting an export company.
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* Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. HDFC Bank recognises the challenges entrepreneurs face while acquiring capital. Thus, HDFC Bank has created MyBusiness, a one-stop solution that gives you easy access to loans, digital solutions and provides you with the essential knowledge you need to run your business. With HDFC Bank MyBusiness, you can scale up, expand your operations, and nurture your business. Short Term Loan at the sole discretion of HDFC Bank Limited. Loan disbursal is subject to documentation and verification as per Bank's requirement. Interest rates are subject to change. Please check with your RM or closest bank branch for current interest rates.
