How to Start an Export Business

India is the 14th largest exporter in the world, exporting a wide range of goods and services. India's exports are growing each year and in a recent report by HSBC, India is set to be among the top 5 exporters in the world by the year 2030. With the Indian Government aggressively promoting manufacturing in India through campaigns like Make in India, exports from India is set to grow at a fast pace over the coming decade. In this article, we look at the licenses and registrations required to start an export business in India.

Top Export Destinations From India in 2030

Business Plan

Before starting any business, it is important to draw out a business plan and plan of action. For those starting an export business, it is important to cover the following aspects thoroughly:

Product or service to be exported
Souring of raw material for manufacturing or delivery of the product or service
Costing of input costs
Working capital requirement
Long-term capital requirement (loan or equity)
License or registration required for exporting
Market study
Customer study
Transportation and logistics

Once, the above information is gathered and profitability is estimated, the Entrepreneur can commence the activities required to secure the necessary registrations and licenses.

Business Registration

The first item on any plan of action for starting an export business is deciding and registering the business entity. In the case of export business, it is recommended that Entrepreneur launch their venture as a Private Limited Company. Private Limited Company offers the promoters of the business - limited liability protection, transferability, easy access to bank loans and more. Further, foreign customers or clients prefer or mandate dealing with a registered corporate entity in India. Proprietorships and Partnership firms are usually classified as an unregistered business. Therefore, the registration of a Private Limited Company is necessary while starting an export business.

Tax Registration

After completing the business registration process, obtain the tax registration in the name of the business entity. PAN or Permanent Account Number is the first tax registration necessary for any new business. After obtaining the PAN, the business can open a bank account and start the process for loan syndication or equipment or raw material purchases - to commence businesses. Goods or services exported from India do not attract GST. However, GST Registration may be required for the business as it would purchase raw materials from outside of the state and service tax registration may be required to bill domestic clients. Therefore, it is recommended that after opening the bank account, the necessary steps are taken to obtain the relevant tax registration.

Import Export Code (IE Code)

An Import Export Code or IE Code is a must for any business involved in the export of goods from India. The Directorate General of Foreign Trade (DGFT) gives a unique IE Code to the businesses to track imports and exports from India. The following documents must available for obtaining IE Code in the name of the business:

In the case of the applicant is a Company/LLP/Partnership Firm:

Name of the Company/LLP/Partnership Firm
Certificate of Incorporation / Partnership Deed
MOA & AOA of the Company, in case of LLP / Partnership Firm, the Partnership Deed
Directors/Partners Identity Proof
Directors/Partners Address Proof
List of Directors / Partners
Bank Reference Letter

In case of the applicant being a Person or Proprietorship

Name of the Proprietorship / Individual
Identity Proof
Address Proof
Bank Reference Letter

Other Licenses or Registrations

To start an export business, the above registrations and licenses may be sufficient in most states. However, based on the state, further registration such as shop & establishment act license, factory license, ESI / PF registration, etc., may also be required. Also, in case the business proposes to manufacturer and export items like food products, approval from FSSAI may also be required.

To start an export business in India, visit IndiaFilings.com or talk to an IndiaFilings Business Advisors.

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Frequently Asked Questions

Common questions about Export Business in India: Start with Key Licenses.

The first steps to starting an export business in India are to develop a comprehensive business plan covering aspects like the product or service to be exported, sourcing of raw materials, costing, capital requirements, licenses or registrations needed, market and customer studies, and transportation and logistics. Once the plan is ready, the entrepreneur should register their business as a Private Limited Company, which is the recommended entity for export businesses.

Registering as a Private Limited Company is recommended for export businesses in India because it offers the promoters limited liability protection, transferability of ownership, and easier access to bank loans. Additionally, foreign customers or clients often prefer or mandate dealing with a registered corporate entity in India, rather than proprietorships or partnerships considered unregistered businesses.

The primary tax registration required for an export business in India is obtaining a Permanent Account Number (PAN). While goods or services exported from India do not attract GST, the business may need GST Registration if purchasing raw materials from outside the state and a service tax registration if billing domestic clients. Therefore, obtaining the relevant tax registrations after opening a bank account is recommended.

An Import Export Code (IE Code) is a unique code issued by the Directorate General of Foreign Trade (DGFT) to businesses involved in the export of goods from India. It is a mandatory requirement for tracking imports and exports from India, and businesses must obtain an IE Code to commence export operations.

To obtain an Import Export Code (IE Code), businesses must provide documents such as the company's incorporation certificate, Memorandum of Association and Articles of Association, list of directors or partners, their identity and address proofs, and a bank reference letter. For proprietorships or individuals, identity and address proofs, and a bank reference letter are required.

Depending on the state and the nature of the export business, additional licenses or registrations may be required, such as shop & establishment act license, factory license, ESI/PF registration, or FSSAI approval for exporting food products. It is advisable to check the specific requirements based on the business location and exported goods or services.

A thorough market and customer study is crucial when starting an export business in India. It helps identify potential markets, customer preferences, and competition, enabling the business to develop effective strategies for marketing, pricing, and positioning their products or services for export.

When estimating capital requirements for an export business, factors such as working capital needs, long-term capital requirements for loans or equity, costs of raw materials and manufacturing, transportation and logistics expenses, and any initial investments in machinery or equipment should be carefully considered.

Yes, an export business in India can bill domestic clients, but it may require obtaining a service tax registration. While goods or services exported from India do not attract GST, the business may need a GST Registration if purchasing raw materials from outside the state and a service tax registration if billing domestic clients.

While there is no specific format, a comprehensive business plan for starting an export business in India should cover aspects like the product or service to be exported, sourcing of raw materials, costing, working capital and long-term capital requirements, licenses or registrations needed, market and customer studies, transportation and logistics, and profitability estimations.