How to start an import export business?

From the silk route to Columbus setting out to find India, history has been shaped by the desire for international trade. Imports and exports remain central to the development of industries. In India, too, this is an integral part of economic growth. The total value of India’s exports was recorded at 0 billion, while the country’s imports reached 4 billion in fiscal 2018-19, according to official data.

With India becoming one of the largest producers and consumers of merchandize, the movement of raw materials and finished goods to and from the country has surged. The easing of restrictions on forex, or foreign exchange, has propelled this trend. And, with the growing ease of doing business here, many trade-based businesses have mushroomed across the country. If you have aspirations of starting an import-export business, here are some tips.

Get a PAN Card for your business

PAN card registration is mandatory for your import-export business. It is issued by the Income Tax Department and is meant for keeping track of the financial transactions and taxes of your firm.

Open a current account

Current account plays a curial role in keeping the personal finances separated from the business transactions. Such an account can handle a large number of transactions and offers several benefits, like overdraft facility, mobile banking, multicity banking, doorstep banking, free demand draft issuance and business debit card.

Enquire about forex services

Ask your bank about the forex services that they offer. These may include inward remittances, outward remittances, hedging, currency protection, foreign letter of credit and information about the latest forex rates.

Manage risks related to forex rates

Since your business will constantly be dealing in forex exchange, your earnings will fluctuate based on exchange rates. You can mitigate the risk of a sudden sharp movement in forex rates by enquiring with your bank about lock-in exchange rates.

Get an IEC number

IEC, or import-export code, is a license provided by the Directorate General of Foreign Trade (DGFT). If you wish to start an import-export business in India, the IEC number is mandatory. The documents required for this are:

• Details of your current bank account.
• A self-attested copy of your PAN card. It can be your business or personal PAN card.
• Your passport-sized photographs attested by your bank.
• A cover letter asking for IEC certification.

Apply for RCMC

RCMC, or the registration cum membership certification, needs to be obtained after you get your IEC number. It is a certificate issued by the Exports Promotion Council. There are 26 locations where the export councils are placed. You can get your certificate from any of these locations.

Hire a shipping company

For delivering your products across borders, you would require an international logistics company. Make sure to do your research before choosing one. If the shipping company is a foreign entity, then the forex rates would cause fluctuations in your cost.

There are several things to be aware of when starting an import-export business, from the forex exchange rates to certifications. Following these steps systematically would help you establish your business.

About This Author

Shaheen Shaikh http://www.adrclinic.co.uk Joined: April 29th, 2018