India’s foreign trade—including both exports and imports—is governed by the Foreign Trade Policy (FTP), formulated by the Central Government under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992. The policy outlines the rules and benefits associated with international trade. As of now, the Foreign Trade Policy 2015-20, which took effect on 1st April 2015, has been extended up to 30th September 2021.
If you’re planning to enter the world of exports, there are several key steps you need to take to ensure a successful launch.
Step-by-Step Process to Start Exporting from India
1. Set Up a Business Entity
To kick-start your export venture, you need to establish a legal business structure. This can be a sole proprietorship, partnership firm, LLP, or private limited company. Choose a catchy brand name and logo to represent your business professionally.
2. Open a Current Bank Account
You must open a current account with a bank authorized to handle foreign exchange transactions. This is essential for dealing with overseas clients.
3. Apply for a PAN Card
A Permanent Account Number (PAN) issued by the Income Tax Department is compulsory for all importers and exporters in India.
4. Get Your Importer-Exporter Code (IEC)
The IEC number is mandatory to carry out import or export activities. It’s a one-time registration, issued by the Directorate General of Foreign Trade (DGFT). You can apply online at www.dgft.gov.in by filling out ANF 2A and paying a fee of ₹500.
5. Obtain RCMC (Registration Cum Membership Certificate)
To benefit from trade incentives under the FTP and access support services, exporters must get registered with the relevant Export Promotion Council (EPC) or FIEO/Commodity Board by obtaining an RCMC.
6. Choose Your Export Product Wisely
Most items are freely exportable except for a few restricted or prohibited products. Analyze export trends, product demand, and market conditions before finalizing the items you want to export.
7. Identify Target Markets
Research and select international markets based on factors like demand, competition, quality standards, and payment terms. You can also explore government trade incentives offered for specific countries.
8. Find Reliable Buyers
You can discover potential buyers by participating in trade fairs, B2B portals, exhibitions, or connecting with Indian Embassies, overseas chambers of commerce, and export councils. Having a multilingual website with your product details, price list, and terms can also attract global buyers.
9. Send Product Samples
Sending customized product samples as requested by potential buyers helps in winning trust and securing orders. The FTP allows the free export of genuine samples without quantity restrictions.
10. Calculate Pricing and Costing
Work out the total export cost including manufacturing, packaging, shipping, and insurance. Use pricing models like FOB (Free on Board), CIF (Cost, Insurance, and Freight), or C&F (Cost and Freight). Prepare a detailed costing sheet for each product to maintain transparency and profitability.
11. Negotiate Smartly
Once you’ve got buyer interest, assess their long-term potential and negotiate terms including price discounts or other conditions. Building lasting relationships can open doors for regular business.
12. Secure Payments via ECGC
International trade carries financial risks due to currency fluctuations, buyer insolvency, or geopolitical issues. The Export Credit Guarantee Corporation of India (ECGC) offers insurance policies to protect exporters from non-payment risks. If your buyer doesn’t offer advance payment or LC, securing a credit limit from ECGC is highly advisable.
