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How to Start Import Export Business?

How to Start Import Export Business?
  1. Introduction
An export is a function of international trade whereby goods produced in one country are shipped to another country for future sale or trade. The sale of such goods adds to the producing nation's gross output. If used for trade, exports are exchanged for other products or services in other countries.
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An import is a good or service brought into one country from another. The word "import" is derived from the word "port," since goods are often shipped via boat to foreign countries. Along with exports, imports form the backbone of international trade; the higher the value of imports entering a country, compared to the value of exports, the more negative that country's balance of trade becomes.
India is the 14th largest exporter in the world, exporting wide range of goods and services. India’s export is growing each year and in recent report by HSBC, India is set to be among top 5 exporters in the world by the year 2030. With the Indian government aggressively promoting manufacturing in India through campaigns like make in India export from India is set to grow at fast pace over the coming decade. So to start export and import business few steps are as below:

  1. Registration of Entity
There are various options in India for business registration -
    1. A proprietorship
    2. One Man Company
    3. Partnership firm
    4. Limited liability partnership
    5. Private limited
You may have option to choose any of the above. At initial level you should choose sole proprietorship or partnership and if further you would like to expand business then you can convert it into company.

  1. Import Export Code
  An import export code is must for any business involved in export of good from India. An IE code is a unique code given to a business by Director General of Foreign Trade (DGFT) to track imports and exports. There is no need for renewal of this code.
In case of applicant being a company/ LLP/Partnership Firm:
      1. Name of the company/LLP/Partnership Firm
      2. Certificate of incorporation/partnership deed
      3. MOA & AOA of the Company, in case of LLP/Partnership firm, partnership deed
      4. Directors /Partners Identity firm
      5. Directors/ Partners Address Proof
      6. List of Directors/Partners
      7. Bank Reference Letter
In case of applicant being a person or proprietorship
  1. Name of proprietorship /Individual
  2. Identity proof
  3. Address proof
  1. Appoint Custom House Agent
In India, a customs house agent (CHA) is licensed to act as an agent for transaction of any business relating to the entry or departure of conveyances or the import or export of goods at a customs station. CHAs maintain detailed, itemized and up-to-date accounts. A CHA license may be temporary or permanent. He will be able to assist you in clearing the batch at the port. Calculating numerous expenses in port is also important, which is the responsibility of an agent. These expenses include handling charge, customs duty, transportation charges and much more.
As per custom laws, any exporter or importer can directly file the document of their own shipment and complete the procedure and formalities. But it is advisable to appoint Custom house agent to help you in working.

  1. VAT and CST registration
VAT and CST or Sales Tax or TIN Registration is required for selling the goods in India for the retailers and manufacture. So, after the business registration you have to apply for the VAT Registration from your state government. VAT is Indirect taxes so its rules and regulations is very state to state. Even in some state there is security concept so it is little bit expensive.

  1. Appointment of Freight Forwarder
Firm specialized in arranging storage and shipping of merchandise on behalf of its shippers. It usually provides a full range of services including: tracking inland transportation, preparation of shipping and export documents, warehousing, booking cargo space, negotiating freight charges, freight consolidation, cargo insurance, and filing of insurance claims. Freight forwarders usually ship under their own bills of lading or air waybills (called house bill of lading or house air waybill) and their agents or associates at the destination (overseas freight forwarders) provide document delivery, deconsolidation, and freight collection services are also called forwarder.
A  Freight forwarder is a company that arranges importing and exporting of goods.

Types of Export / Import Business
  1. Export management company (EMC): An EMC handles export operations for a domestic company that wants to sell its product overseas but doesn't know how (and perhaps doesn't want to know how). The EMC does it all--hiring dealers, distributors and representatives; handling advertising, marketing and promotions; overseeing marking and packaging; arranging shipping; and sometimes arranging financing. In some cases, the EMC even takes title to the goods, in essence becoming its own distributor. EMCs usually specialize by product, foreign market or both, and--unless they've taken title--are paid by commission, salary or retainer plus commission.
  2. Export trading company (ETC): While an EMC has merchandise to sell and is using its energies to seek out buyers, an ETC attacks the other side of the trading coin. It identifies what foreign buyers want to spend their money on and then hunts down domestic sources willing to export. An ETC sometimes takes title to the goods and sometimes works on a commission basis.
  3. Import/export merchant: This international entrepreneur is a sort of free agent. He has no specific client base, and he doesn't specialize in any one industry or line of products. Instead, he purchases goods directly from a domestic or foreign manufacturer and then packs, ships and resells the goods on his own. This means, of course, that unlike the EMC, he assumes all the risks (as well as all the profits).

Some Tips which is require for Import Export Business in India:-
  1. Business Current Account must have a SWIFT Code.
  2. Find Reputed Supplier from Alibaba or other Website.
  3. Raise Purchase Order (PO) on your Company Name.
  4. Purchase Order and Invoice amount must be same.
  5. Hire third parties for the shipping.

As we have mentioned above India is set to be among top 5 exporters in the world by the year 2030. So, Import/ Export start up is great business idea. But in India there is some legal compliance which is mandatory to follow. So, start this business with due care and gain huge profit in future.


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