Exporting goods from India is a rewarding venture, with businesses having the opportunity to tap into global markets and reach international buyers. However, navigating the export process in India can seem like a daunting task, especially for new exporters. From compliance with government regulations to ensuring goods meet international standards, the export process requires careful planning and execution.
In this post, we’ll guide you through the detailed process of exporting from India, breaking it down into key steps to make it easy for you to understand and get started.
1. Understand Your Product and Market
Before you begin exporting, it’s crucial to have a thorough understanding of your product and the market you wish to export to. Market research will help you identify where your product has demand and what the competition looks like. Some factors to consider include:
- Product Compliance: Does your product comply with the regulatory standards of the importing country?
- Demand and Pricing: What is the demand for your product in the target market? How does your pricing compare to competitors?
- Logistics: How will you ship your goods to the buyer, and what costs are involved?
Conducting proper market research will allow you to make informed decisions about your product’s export potential.
2. Obtain a PAN and IEC Code
For any business to export from India, you must have a Permanent Account Number (PAN), which is required for all financial transactions. This can be obtained from the Indian Income Tax Department.
Next, you’ll need to obtain an Import Export Code (IEC) from the Directorate General of Foreign Trade (DGFT). The IEC is essential for any export business as it acts as a unique identifier for your business in international trade.
To apply for an IEC, you can do it online through the DGFT website by providing the necessary documents, which include:
- PAN card
- Address proof
- Bank details with a cancelled cheque
- A valid mobile number and email ID
Once your IEC is issued, it remains valid for a lifetime and is required at various stages during the export process.
3. Select the Right Export Products
While understanding your market is critical, selecting the right product for export is equally important. Not all products are viable for export, especially when considering global demand, market competitiveness, and regulations.
The Foreign Trade Policy (FTP) of India has detailed information on which products can be exported, and it also provides incentives for certain export categories. You should check whether your product falls under any restrictive or banned categories. Some products may also require special permission or licenses for export.
4. Register with Export Promotion Councils
India has various Export Promotion Councils (EPCs) based on different product categories, such as textiles, gems and jewelry, machinery, etc. These councils provide support, guidance, and access to trade fairs and buyer-seller meets. Being a member of an EPC can give your business credibility and help you connect with potential buyers.
You can register with an EPC related to your product category by providing your PAN, IEC, and other business details. These councils often offer assistance on matters like trade negotiations and market access.
5. Pricing, Costing, and Quotations
Accurately pricing your product for the export market is critical to remaining competitive and profitable. Consider the following costs when determining your export price:
- Cost of production: This includes raw materials, labor, and overheads.
- Packaging: Export goods often require different packaging standards to meet international regulations.
- Transportation and Freight: Shipping costs vary depending on the mode of transportation and destination.
- Custom Duties and Taxes: Understand the applicable export duties and GST refund mechanisms.
- Commissions: If you’re working through an agent or intermediary, their commission will be an additional cost.
Once you have a clear understanding of these expenses, prepare a Proforma Invoice to offer to potential buyers. A Proforma Invoice is a quote given to buyers outlining the product price, shipping terms, and payment methods.
6. Export Contracts and Payment Terms
Before you start the shipping process, ensure that you have a solid export contract with the buyer. This document should detail all terms and conditions, including:
- Product specifications
- Pricing
- Delivery timelines
- Payment terms (advance, Letter of Credit, etc.)
- Incoterms (These define who bears the cost and risk at each stage of the shipping process)
For secure payments, Indian exporters often use Letters of Credit (LC), Advance Payments, or Documents Against Payment (DAP) methods. The Letter of Credit is one of the safest options, as the buyer’s bank guarantees the payment after the goods have been shipped.
7. Manufacturing, Quality Control, and Packaging
Once you have received the export order, begin manufacturing your goods according to the buyer’s specifications. Pay close attention to quality control to ensure that your product meets both domestic and international standards.
Packaging is also a key element of exporting. Products must be packed according to the international guidelines to protect them during transit and to meet the environmental or labeling regulations of the destination country.
8. Arrange for Transportation and Logistics
Now that your goods are ready, you’ll need to arrange for transportation. Depending on the product and destination, you can ship via air, sea, or land. Most exporters use freight forwarders who specialize in handling the logistics of exporting goods. They can assist with:
- Booking cargo space on ships or airplanes
- Managing customs clearance
- Coordinating transportation from the warehouse to the port
9. Customs Clearance and Documentation
Customs clearance is a critical step in the export process. You will need to prepare and submit the following documents to Indian customs authorities:
- Shipping Bill or Bill of Export
- Commercial Invoice: The final bill for the goods sold.
- Packing List: Detailing the contents of each package.
- Bill of Lading (BL) or Airway Bill (AWB): Proof of shipment.
- Certificate of Origin: Issued by the chamber of commerce or trade bodies, verifying that the goods were produced in India.
Your freight forwarder will typically handle this paperwork, ensuring that all required documents are in order for a smooth customs clearance.
10. Shipping the Goods and Receiving Payment
Once your goods have cleared customs, they are loaded onto the vessel or plane for shipment. You’ll receive a Bill of Lading or Airway Bill, which serves as proof of shipment.
At this stage, you will provide the necessary shipping documents to the buyer’s bank (if using a Letter of Credit) or directly to the buyer (for other payment methods) to receive payment.
After the buyer has received the goods, the payment will be released based on the terms agreed upon in your export contract.
11. Claim Export Incentives and Benefits
Finally, as an exporter, you are eligible for various incentives under the Indian Government’s export promotion schemes, such as:
- Duty Drawback Scheme: Refunds of duties paid on imported raw materials used in manufacturing export goods.
- Merchandise Exports from India Scheme (MEIS): Provides duty credit scrips to exporters based on the FOB value of exports.
Be sure to claim any applicable benefits to reduce your overall costs and boost profitability.
Conclusion
The process of exporting from India may seem complex at first glance, but once you break it down step by step, it becomes manageable. With the right planning, research, and execution, Indian exporters can access lucrative international markets, growing their business on a global scale.
