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Steps To Setup An Export Business

The document outlines the steps needed to start an export business from India. It discusses establishing an organization, obtaining necessary licenses and registrations, selecting products and markets, finding buyers, negotiating prices, and processing export orders in accordance with regulations.

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38 views7 pages

Steps To Setup An Export Business

The document outlines the steps needed to start an export business from India. It discusses establishing an organization, obtaining necessary licenses and registrations, selecting products and markets, finding buyers, negotiating prices, and processing export orders in accordance with regulations.

Uploaded by

srinath.vj
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Starting an export business

HOW TO EXPORT FROM INDIA?


INTRODUCTION:
India's Foreign Trade i.e. Exports and Imports are
regulated by Foreign Trade Policy notified by Central
government in exercise of powers conferred by section 5
of foreign trade (Development and Regulation) Act 1992.
Presently Foreign Trade Policy 2015-20 is effective from
1st April, 2015. As per FTD & R act, export is defined as
an act of taking out of India any goods by land, sea or air
and with proper transaction of money. The FTP 2015-20
has been extended till 30th September, 2021.

STARTING EXPORTS
Export in itself is a very wide concept and lot of
preparations is required by an exporter before starting an
export business. To start export business, the following
steps may be followed:
1) Establishing an Organisation
To start the export business, first a sole Proprietary
concern/ Partnership firm/Company has to be set up as
per procedure with an attractive name and logo.

2) Opening a Bank Account


A current account with a Bank authorized to deal in
Foreign Exchange should be opened.

3) Obtaining Permanent Account Number (PAN)


It is necessary for every exporter and importer to obtain
a PAN from the Income Tax Department.

4) Obtaining Importer-Exporter Code (IEC) Number


• As per the Foreign Trade Policy, it is mandatory to
obtain IEC for export/import requisite documents as
mentioned in the application form.
5) Registration cum membership certificate (RCMC)
For availing authorization to import/ export or any other
benefit or concession under FTP 2015-20, as also to avail
the services/ guidance, exporters are required to obtain
RCMC granted by the concerned Export Promotion
Councils/ FIEO/Commodity Boards/ Authorities.

6) Selection of product
All items are freely exportable except few items
appearing in prohibited/ restricted list. After studying the
trends of export of different products from India proper
selection of the product(s) to be exported may be made.

7) Selection of Markets
An overseas market should be selected after research
covering market size, competition, quality requirements,
payment terms etc. Exporters can also evaluate the
markets based on the export benefits available for few
countries under the FTP. Export promotion agencies,
Indian Missions abroad, colleagues, friends, and relatives
might be helpful in gathering information.
8) Finding Buyers
Participation in trade fairs, buyer seller meets,
exhibitions, B2B portals, web browsing are an effective
tool to find buyers. EPC's, Indian Missions abroad,
overseas chambers of commerce can also be helpful.
Creating multilingual Website with product catalogue,
price, payment terms and other related information
would also help.

9) Sampling
Providing customized samples as per the demands of
Foreign buyers help in getting export orders. As per FTP
2015-2020, exports of bonafide trade and technical
samples of freely exportable items shall be allowed
without any limit.

10) Pricing/Costing
Product pricing is crucial in getting buyers' attention and
promoting sales in view of international competition. The
price should be worked out taking into consideration all
expenses from sampling to realization of export proceeds
on the basis of terms of sale i.e. Free on Board (FOB),
Cost, Insurance & Freight (CIF), Cost & Freight(C&F), etc.
Goal of establishing export costing should be to sell
maximum quantity at competitive price with maximum
profit margin. Preparing an export costing sheet for every
export product is advisable.

11) Negotiation with Buyers


After determining the buyer's interest in the product,
future prospects and continuity in business, demand for
giving reasonable allowance/discount in price may be
considered.

12) Covering Risks through ECGC


International trade involves payment risks due to buyer/
Country insolvency. These risks can be covered by an
appropriate Policy from Export Credit Guarantee
Corporation Ltd (ECGC). Where the buyer is placing order
without making advance payment or opening letter of
Credit, it is advisable to procure credit limit on the
foreign buyer from ECGC to protect against risk of non-
payment.
****
Processing an Export Order
i. Confirmation of order
On receiving an export order, it should be examined
carefully in respect of items, specification, payment
conditions, packaging, delivery schedule, etc. and then
the order should be confirmed. Accordingly, the exporter
may enter into a formal contract with the overseas buyer.
ii. Procurement of Goods
After confirmation of the export order, immediate steps
may be taken for procurement/ manufacture of the
goods meant for export. It should be remembered that
the order has been obtained with much efforts and
competition so the procurement should also be strictly as
per requirements.
Steps to start an export business

Setup the Organization

Select mode of operation

Name the Business and


Choose the Product

Select the Markets

Select the Buyers

Select channel of
Distribution

Processing the
Export Order

Enter export contract

Decide export
Pricing & Costing

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