Set Up your Import-Export Business: Happily Trade Guide
August 26, 2021
Growing your import-export business is all about matchmaking. You need to match product manufacturers to markets that have clearly demonstrated demand for those products. To be able to match products and markets, demand and supply, you will need reliable methods of data discovery. But once you’ve got the discovery effort in place, you stand to be part of an economy that clocked a 49.9% growth in merchandise exports year-on-year in the month of July 2021.
In general, there are Three Ways in which you can enter the import-export business in India.
- As an Export Management Company (EMC)
As an EMC, you will be responsible for finding export solutions for Indian product manufacturers. This means that you will be in charge of distribution, handling shipping and logistics, customs clearances, and/or marketing.
- An Export Trading Company (ETC)
An ETC, on the other hand, finds demand in foreign markets first and then searches for Indian manufacturers that can meet those foreign demands. In order to operate as an ETC, you should comply with the rules of the Department of Commerce, the Government of India. Sometimes these rules may carry stringent conditions and restrictions, which you need to be aware of before you set foot into this business.
- Export-Import Merchant
A merchant who specializes in export or import acts as a free agent between markets – foreign or domestic – and manufacturers anywhere in the world. There is, however, considerable risk in the free agency business, but you get to keep all your profits to yourself, without involving middlemen.
What Do you Need Before Starting an Import-Export Business?
You can start contacting suppliers, vendors, distributors, and others with just a computer and an internet connection. However, the Government of India needs to track and tax your profits and so, certain legal requirements need to be met before you’re set to go.
- A valid PAN (Permanent Account Number) & GST Registration
- Register your Company with the Registrar of Companies if you plan to operate as a Company. Registration is advised even if you plan to run a Sole Proprietorship, a Partnership Firm (where otherwise registration is optional), or an LLP.
- Open a Current Account.
- Get an Importer Exporter Code (IEC) from the Directorate General of Foreign Trade under the Ministry of Commerce. This process is now completely online and can be completed within minutes.
- Identify the product(s) that you wish to import or export. This will help you decide which Export Promotion Council (EPC) you need to apply to for membership. Being a member of such councils gives you access to events, conferences, and other assistance you may require from time to time.
- Before you become a member of an EPC you would need a Registration Cum Membership Certificate (RCMC) from a statutory Export Development Authority. For example, the Marine Products Export Development Authority (MPEDA) processes RCMCs for marine products.
- Subscribe to an Import-Export Trade Data platform. You may think you can do all the research you need to about profitable markets, and products in demand. But as you will quickly discover, speed is quintessential to get the right products to the right markets before anyone else. Plus, there may be trade barriers, political environments, and other factors to account for. It may also take you years to get through to the right vendor, distributor, or supplier. You can avoid costly mistakes by subscribing to a ready-made, updated trade database that can get you emails, addresses, and phone numbers without delay.
- Organize your bookkeeping and accounting from the get-go. Don’t wait for the tax authorities to come and audit your business. Besides, good finances make credit available to you instantly and prevent deal-breaking cash flow problems.
Being an importer or exporter is a challenging and stressful profession. However, with the right knowledge and plan, you can make things predictable. Get in touch with an importexport data representative for a FREE consultation today.