What are the Different Challenges Faced by Indian Exporters?
23 January, 2024
A stepwise understanding of the export process is the academic side of the profession. However, if you wish to become a seasoned exporter, you should be prepared for the problems faced by Indian exporters.
Business-related challenges
Business-related exporting problems include:
Lack of relevant knowledge - Many entrepreneurs hesitate and procrastinate in their export aspirations because of their lack of knowledge and information. They may have a suitable product but lack the know-how on how to sell it overseas.
Identifying new market - An entrepreneur may be export-ready but may lack the right approach towards getting their first export order. How to select a particular country, whom to approach, and how to find a buyer are typical questions that would come up.
Market information - Not every entrepreneur may have information about the export promotion councils and the Federation of Indian Export Organisations. They may struggle to gather the necessary market insights required to start an export business.
Local environment
The local environment around the exporter can create problems in export trade too.
Compliance complexity - One of the unavoidable yet major problems of India’s export sector is the complex documentation. There is a long checklist of documents that an exporter needs. This includes one-time documents like the IEC, RCMC, GST, BIN, entity registration documents, etc., and regular documents like bill of lading, bill of exchange, certificate of origin, insurance, quality inspection certificate, packing list, etc.
Availability of skilled workers - Export quality products automatically means a superior quality product. Exporters may struggle to find skilled workers who can produce world-class products. This is often faced by exporters who receive a bulk export order.
International constraints
Problems faced by Indian exporters in the international market are:
Competition - Unless your product is unique, you will face two-fold competition in export trade. First, there will be existing exporters from India who are vying for export orders from the same or similar geographies. Secondly, exporters from another country may challenge you with competitive pricing or product USP.
Trade barriers and tariffs - Our exports lead to cash outflow for the buying country. Therefore, many countries try to restrict the cash outflow from their country through the imposition of various regulations and import tariffs. These tariffs increase the cost of the product and subsequently reduce the demand for the product in the foreign country.
Quality standards - Most developed countries are sticklers for quality and can promptly reject any product inferiority is spotted. This is one of the major problems of India’s export sector. For instance, in March 2023, an Indian pharmaceutical company recalled 55,000 bottles of medicine from the US market after they failed an impurity test.
Global environment
Global export trade has some unique challenges that are faced by exporters of most countries. These challenges include:
Digitisation - Traditional exporters are facing stiff challenges from e-commerce platforms and tech-savvy exporters.
Supply chain disruption - Unlike in the case of domestic sales, an exporter has very little control over the logistics part of the export trade. Any supply chain disruption can cause dissatisfaction for the buyer and affect future trade relations.
Currency fluctuation - Sudden fluctuations in the foreign currency can affect the profitability of an export trade. Exporters often mitigate this risk through forward contracts and diversifying their currency exposure.
Language and customs - Different countries may mean different languages and accents, different trading practices and negotiation tactics, and so on.
Take on the challenge
The expert guidance of certified trade specialists can help you navigate international trade in an informed manner. It is one of the many stellar features of the HDFC Bank Export Trade Services. Apply for it today!
*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.