Want to export your products and sell them to customers in a foreign country?
You must know these before getting into the exporting business.
What are the kinds of items that can be exported?
Freely Exported Goods:
Some goods do not require any license to be exported can be referred to as the Freely Exported Goods. Only an IEC (Import Export Code) needs to be obtained for such goods.
Eg: Textiles, Organic chemicals, Plastics, Meat, etc.
See the full list of “Freely Exported Goods” here.
Some goods can be exported freely but require authorization and license for the same.
Eg: Potatoes, Coriander seeds, Ginger, barley, Bajra, Soybeans, Cotton, marble, etc.
See the full list of “Restricted Goods” here.
Some items are strictly prohibited by law to be exported to other nations.
Eg: Tiger-Cat skins, Skins and other parts of wild birds, Shark fins, etc
See the full list of “Prohibited Goods” here.
What taxes are imposed on Exported Goods?
Export duty can be imposed in two ways:
- Based on the weight of the product.
- Based on the percentage of the Export Value.
In addition to the export duty, an export cess may be applied
See the Export Duty for the year 2018-19 here
What are the Steps to Export Goods from India?
Step 1: Establish an Organisation
To start exporting items, register an organization, as a Sole Proprietary/ Partnership firm/Company.
Step 2: Open a Bank Account
You need to open a “current account” with a bank to be able to deal with Foreign Exchange.
Step 3: Obtain Permanent Account Number (PAN)
It is necessary for every exporter and importer to obtain a PAN from the Income Tax Department. (To apply PAN Card Click here)
Step 4: Obtain the Importer-Exporter Code (IEC) Number
It is mandatory to obtain IEC for export/import from India.
- Submit an application for IEC is filed online at www.dgft.gov.in,
- Pay an application fee of Rs. 500/– through net Banking or credit/debit card.
- Provide necessary documents as mentioned in the application form. (For more information Click here)
Step 5: Registration cum membership certificate (RCMC)
With this, you can claim any sort of benefit or concession. You will be eligible for services/guidance from the right authorities regarding import-export queries.
Step 6: Select products to export
Step 7: Choose where you want to export
Choose your countries based on demand. Analyze market size, competition, quality requirements, payment terms, etc. You can evaluate the markets based on the export benefits available for a few countries.
Step 8: Find Buyers
Participation in import-export trade fairs, buyer-seller meets, exhibitions, etc. Creating a multilingual Website with product catalog, price, payment terms, and other related information. Make way for leads.
Step 9: Provide Samples
Provide samples on request to your Foreign buyers to get more export orders. Samples of freely exportable items shall be allowed without any limit.
Step 10: Set up your Pricing/Costing
This will help in getting your buyers’ attention and to promote sales in view of international competition. The price should be calculated 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.
The idea is to sell the maximum quantity at a competitive price with a maximum profit margin. Prepare an export costing sheet for every export product.
Step 11: Negotiate with Buyers
When you get the lead, consider giving a reasonable allowance/discount in price.
Step 12: Cover your Risks through ECGC
There is always a payment risk in International trades. However, these risks can be covered by an appropriate Policy from Export Credit Guarantee Corporation Ltd (ECGC). Where the buyer places an order without making an advance payment, it is advisable to procure a credit limit on the foreign buyer from ECGC to protect against the risk of non-payment. (To know more about ECGC Click here)
How to Process an Export Order?
Step 1: Confirm the Order Placed
On receiving an export order, carefully examine the order in terms of the number of items, specifications, payment conditions, packaging, delivery schedule, etc. and then confirm the order.
Step 2: Obtain your Goods
Procure your goods meant for export on time. Do not delay.
Step 3: Do a Quality Check
It is important to be quality conscious about the export goods. Some products like food and agriculture, fishery, certain chemicals, etc. are subject to compulsory pre-shipment inspection. Maintain high quality to sustain in export business.
Step 4: Get Financed
You are eligible to obtain pre-shipment and post-shipment finance from Commercial Banks at concessional interest rates to complete the export transaction.
Step 5: Labeling, Packaging, Packing, and Marking
Label, package and pack your goods in good condition. It should be strict as per the buyer’s specific instructions. Good packaging is always attractive to buyers.
Similarly, good packing helps easy handling, maximum loading, reducing shipping costs and ensuring safety and standard of the cargo.
Marking such as an address, package number, port, and place of destination, weight, handling instructions, etc. provides identification and information of cargo packed.
Step 6: Get Insured
Having a policy covers the risks of loss or damage to the goods when they are in transit. So always have your insurance ready.
Step 7: Delivery
Make sure you get the goods delivered on time. Plan right so that nothing stands in the way of fast and efficient delivery.
Step 8: Keep the Documents Ready
The following are the mandatory documents for import and export.
- Bill of Landing/ Airway bill
- Commercial invoice cum packing list
- Shipping bill/ bill of export/ bill of entry (for imports)
(Other documents like certificate of origin, inspection certificate etc may be required)
Step 9: Submit documents to Bank
After shipment, present the documents to the Bank within 21 days for onward dispatch to the foreign Bank for arranging payment. Documents should be drawn under Collection/Purchase/Negotiation under L/C as the case may be, along with the following documents
– Bill of Exchange
– Letter of Credit (if the shipment is under L/C)
– Packing List
– Airway Bill/Bill of Lading
– Declaration under Foreign Exchange
– Certificate of Origin/GSP
– Inspection Certificate, wherever necessary
– Any other document as required in the L/C or by the buyer or statutorily.
Step 10: Realization of Export Proceeds
As per FTP 2015-2020, all export contracts and invoices shall be denominated either in the freely convertible currency of Indian rupees, but export proceeds should be realized in freely convertible currency except for export to Iran. Export proceeds should be realized in 9 months.
Do you have any questions related to export products from India? Please Comment Below.
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