India is amongst the world’s top nation’s leading the export of merchandise. With the progressed liberalization of trade by the Indian Government, there’s an abundant opportunity for establishing a profitable export business. Also, Exports promote international trade and stimulate domestic economic activity by creating employment, production, and revenues. In this article, we will discuss the entire concept of export business and its procedure.
Exports and Imports in India
India’s Foreign Trade i.e. Exports and Imports are managed by the Central Government in the exercise of powers conferred by section 5 of the foreign trade (Development and Regulation) Act 1992. Presently Foreign Trade Policy 2015-20 is active from 1st April 2015. According to the Reserve Bank of India (RBI) guidelines, an exporter is required to obtain an IEC Code from the concerned regional licensing authority.
Why Prefer Export Business
Export Business offers lots of benefits and opportunities, some of them are –
- Access to more consumers and businesses.
- Diversifying market opportunities
- Expanding the lifecycle of mature products.
- Greater production can reach larger economies of scale and better margins.
Spices Board of India
The Spices Board was founded on 26th February 1987 under the Spices Board Act 1986. Spices Board is one of the five Commodity Boards working under the Ministry of Commerce & Industry. It is an autonomous body engaged for the export promotion and product development of spices in India.
Starting Export Business from India
To start an export business, the following steps may be considered:
1) Setup a Company
To start the export business, firstly, get company Incorporation or Company has to be established as per procedure with an attractive name and logo.
2) Starting a Bank Account
A current account with a Bank authorized to trade in Foreign Exchange should be opened.
3) Getting Permanent Account Number (PAN)
It is mandatory for every exporter and importer to obtain a PAN from the Income Tax Department.
4) Obtaining the Importer-Exporter Code (IEC) Number
As per the Foreign Trade Policy, and guidelines by the Reserve Bank of India (RBI), An exporter has needs to obtain an IEC Code Number from the concerned regional licensing authority.
5) Obtaining a registration cum membership certificate (RCMC)
For getting authorization to import/ export or any other advantage or concession under FTP 2015-20, exporters are required to obtain RCMC from the concerned Export Promotion Councils/ FIEO/Commodity Boards/ Authorities.
6) Selection of product and Markets
All items are freely exportable excluding few items appearing in prohibited/ restricted lists. Exporters can also assess the markets based on the export benefits available for a few countries under the FTP.
8) Searching Buyers
Participation in trade fairs, buyer-seller meets, exhibitions, B2B portals, web browsing is an efficient tool to find buyers.
9) A sampling of the Product
Rendering customized samples as per the demands of foreign buyers help in getting export orders.
10) Pricing/Costing of product
Product pricing is important in getting buyers’ attention and promoting sales in view of international competition. The goal of establishing export costing should be to trade maximum quantity at a competitive price with a maximum profit margin.
11) Negotiation with Buyers
After learning the buyer’s interest in the product, it is necessary to determine the reasonable allowance/discount in the price of the product.
12) Defending Risks through ECGC
International trade includes payment risks due to buyer/ Country insolvency. So it is advisable to procure credit limits on foreign buyers from ECGC to protect against the risk of non-payment.
If you require any other guidance concerning IEC Code online, please feel free to contact our business advisors at 8881-069-069.
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