Starting a new export and import business is quite a complex venture. When startups step into the Exim domain, they often find themselves grappling with a multitude of questions. These can vary from understanding the necessary paperwork to ensuring compliance with legal obligations. In this blog, we shall provide a helpful roadmap of the process to set up export and import business in India.
Types of Import-Export Businesses
The process to set up export and import business in India includes various specialised entities that play distinct roles in the global trade ecosystem. These different types of businesses cater to specific needs within the import and export industry.The three key types of import-export businesses are:
1. Export Trading Company
Export Trading Companies, abbreviated as ETCs, specialise in connecting domestic suppliers or manufacturers with international buyers seeking specific products. ETCs bridge the gap between these entities, facilitating the export of goods from domestic sources to foreign markets.
ETCs identify domestic entities capable of meeting the demands of international buyers. They then coordinate the export process, handling tasks such as sourcing products, negotiating deals, arranging logistics, and ensuring compliance with export regulations. In essence, they serve as intermediaries that simplify the export process.
2. Export Management Company
Export Management Companies, or EMCs, function as service providers for export-oriented businesses. These companies offer comprehensive export management services, essentially acting as outsourcing partners for other export firms.
EMCs take on the responsibility of managing the entire export operation on behalf of their clients. This includes tasks like identifying potential buyers, establishing distribution channels, organising transportation and logistics, and ensuring compliance with export regulations. EMCs earn compensation for their services, making it convenient for export companies to leverage their expertise.
3. Import/Export Agents
Import/Export Agents operate as independent intermediaries who facilitate the movement of goods between domestic and international markets. They do not represent any specific company but act as intermediaries to facilitate trade.
Import/Export Agents operate as independent agents who purchase products from domestic or foreign manufacturers and then resell these goods to businesses worldwide. They play a vital role in connecting suppliers and buyers, negotiating deals, handling documentation, and managing the logistics of international trade. Import/Export Agents earn commissions or fees for their brokerage services.
So, the process to set up export and import business in India has various specialised businesses, each with its unique role and functions. Export Trading Companies focus on connecting domestic suppliers with foreign buyers, Export Management Companies provide comprehensive export management services, and Import/Export Agents serve as independent intermediaries who facilitate global trade transactions.
Documents Required for the Process to Set Up Export and Import Business in India
For the process to set up export and import business in India, various legal documents and certifications are essential. Below are the key documents required for the process to set up export and import business in India:
1. Company Registration Certificate
A Company Registration Certificate is a crucial legal document that signifies the formal registration of a business or organisation. It outlines the terms of business, details of incorporation, and legal status. Obtaining this certificate is a fundamental step in establishing the legal entity of an import-export business.
2. Permanent Account Number Card
The PAN card is a digital system designed to monitor tax-related transactions for both individuals and companies in India. It provides a unique Permanent Account Number that is essential for financial and taxation purposes. Every import-export business must possess a PAN card to comply with tax regulations and facilitate transparent financial transactions.
3. Current Account
A Current Account is a dedicated bank account exclusively used for business transactions. It is distinct from a savings account and is specifically designed to handle the financial operations of a business. Maintaining a current account ensures proper record-keeping and transparency in financial dealings.
4. Import Export Code
The Import Export Code, also referred to as IEC, is a very important licence issued by the Government for businesses engaged in import and export activities. This 10-digit code is issued by the Director General of Foreign Trade. IEC registration serves as a unique identifier for import-export businesses and is mandatory for international trade operations.
5. Registration Cum Membership Certificate
The Registration Cum Membership Certificate is issued by the Exports Promotional Council (EPC) to exporters. This certificate certifies that the products being exported are approved by the government and it is a very important document for exporters, as it enables them to establish credibility and access various benefits.
What is the Process to Set up Export and Import Business in India?
The process to set up export and import business in India involves several crucial steps and legal requirements, as have been mentioned below:
1. Obtain a PAN Card for Your Company
To begin the process to set up export and import business in India, you need to secure a Permanent Account Number card for your company. Ensure that you have valid identification and address proof to register your business. This PAN is essential for taxation related qualifications of the business.
2. Choose the Right Business Structure
Choosing the apt business structure is the next step in to set up export and import business in India, which includes:
– Limited Liability Partnership under the LLP Act, 2008
– Private Limited Company under the Companies Act, 2013
– One Person Company under the Companies Act, 2013
– Partnership Firm under the Partnership Act, 1932
Before making your choice, carefully consider factors such as ownership structure, scope of operation, management requirements, and compliance obligations.
3. Open a Current Account in a Designated Bank
Opening a current account is mandatory for conducting business-related transactions. For ensuring a successful process to set up export and import business in India, you must have an active current account to handle financial transactions with customers and other concerned parties.
4. Obtain an Import Export Code from DGFT
The Import Export Code is essential for conducting international trade. This licence is granted under the Foreign Trade Policy and is issued by the Directorate General of Foreign Trade. To streamline this process, you can consider using services provided by organisations like StartupFino to simplify the paperwork and compliance requirements.
5. Secure Registration Cum Membership Certificate
India has various export-promotion councils that support the export of different products and services. Registering with these councils provides your export and import business access to various growth-oriented benefits. The RCMC serves as a link between your Exim business and export promotion councils, facilitating various benefits and opportunities.
Additional Certificates for Export and Import Business Success
In addition to the essential steps mentioned earlier for the process to set up export and import business in India, securing certain certificates can significantly contribute to the growth and success of your export and import business in India. Mentioned below are three important certificates you should consider obtaining:
1. Trademark Registration
Trademark Registration is an important piece of certificate, given when the risk of intellectual property infringement is high. Trademark registration not only safeguards your business but also prevents costly legal disputes. It is a crucial step for businesses operating in today’s dynamic marketplace.
2. ISO 9001 Certification
ISO 9001 is a comprehensive set of policies and processes that enable businesses to strengthen their core areas, ultimately leading to improved business performance. Implementing ISO 9001 standards is an effective way to identify, analyse, and enhance key business processes that may lack efficiency. ISO 9001 certification serves as an internationally recognised standard for quality management systems, boosting your business’s credibility in the global market.
3. MSME Certificate
Obtaining an MSME Certificate / MSME registration or Udhyam Registration is essential for export and import businesses, especially smaller enterprises. This certificate provides access to various government schemes and initiatives designed to support and promote the growth of micro, small, and medium enterprises. For small exporters with limited financial resources and other constraints, the MSME certificate is invaluable in facilitating business expansion and development.
Final Thoughts
The process to set up export and import business in India requires careful planning, adherence to legal requirements, and obtaining essential certificates. From securing a PAN card to choosing the right business structure, opening a current account, and obtaining licences like IEC and RCMC, these initial steps form the foundation of a successful venture.
Additionally, in the process to set up export and import business in India, certificates such as Trademark Registration, ISO 9001, and the MSME Certificate can further boost your business’s credibility, protect intellectual property, and provide access to valuable government schemes. By following these steps and obtaining these certificates, your export and import business can navigate the complexities of the Indian market, expand its operations globally, and thrive in today’s competitive business landscape.
