Exporting from India - Part I : How to export?

First, let us discuss the Types of Exporters:

Merchant exporter: Merchant exporters do not have their own manufacturing unit or processing factories.

Manufacturer exporter: Manufacturer exporters procure and process raw materials to transform into final product and export them.

Service exporter: Service exporters are category of exporters who help foreign countries when they need services like Software, Healthcare, Consultancy or Hospitality.

With that explained, Here is a MUST KNOW for all Exporters:

India has signed the WTO agreement to allow it to be legally bound to trade with other countries on principles of-

  •  Most favored nation
  •  National treatment
  •  Respect for other country’s technical, sanitary and phytosanitary (SPS) standards
  •  Special and preferential treatment to developing countries

Once you are convinced to expand your business globally, here are the ways through which your business can gain an international access.

Basics of exports:

1. To start an export firm:

     a. Name the business entity

        The firm can be a

  •     Proprietary firm where no registration is required since an individual runs the business.
  •     Partnership firm which involves minimum 2 individuals. This type of firm also does not require a registration with registrar of companies.
  •     Public/ Private company which requires a minimum of 7 members (Public Company) or minimum 2 individuals (Private Company). This entity needs to be registered under Company’s act. Liability of members is limited to the number or percentages of shares they hold.

     b. Create a company logo

     c. Create a website

Establishing an export business:

  •     Acquire the PAN number from the Department of Income Tax
  •     Register for excise in Central Board of Excise and Customs
  •     Register for sales tax in sales office
  •     Open current account in a scheduled Bank
  •    Apply for IEC in DGFT: The Directorate General of Foreign Trade (DGFT) with its 4 zonal offices in Mumbai, Delhi, Chennai and Kolkata along with 35 regional offices is the first point of contact once you make your mind to export. Further, the central government derives its statutory powers to frame the foreign policy from the FTDR act. Any changes and updates in this foreign policy are made available for public on DGFT website. The updates are in the form of circular, public notices and notifications. Since taxes, duties and charges can’t be classified as exports, refunds on those taxes, duties and charges are paid after export where in DGFT has a role to play. Any authorizations, invalidation letter, advance authorization, applications for central duty refund/ neutralization/ exemption/ specific schemes require procedure to be facilitated through DGFT. 

While dealing with customers on any terms of the contract, you will need a good knowledge on the trade INCOTERMS (International Commercial terms). 

*Above info was published on eximdesk.com by Aditi