As globalization is at its peak, the import-export business has emerged as a new opportunity with massive potential in the long run. It is a challenging task; probably the first thing in your mind will be to start an import-export business. Not you alone most of the new entrepreneurs planning to pursue this career are full of questions. There is a lack of legal literacy among newcomers. Most new entrepreneurs don’t know what documents they will need and what legal processes they will have to do. This type of information is not available on the internet. Instead of the solution, you will get more and more confusion. Most of the information available on the internet regarding how to start an import-export business is misleading and confusing.
This article will navigate you to your goal. After reading this article, you will get most of your answers on starting an import-export business. Think wisely while taking crucial decisions like selecting the right business model, identifying market requirements, adjusting yourself according to the situation, documentation, legal procedures, processing, and delivering the orders. In this article, we tried to elaborate on all the necessary things while starting this business.
Complete Guide – How To Start An Import-Export Business?
The import-export market is highly moderated and monitored by the government. There are predefined procedures that everyone has to follow. Getting essential documents is a necessity. Most important is a PAN card. PAN stands for Permanent Account Number.
You can apply for a PAN if you are older than 18 years. Along with your identity proofs and address proofs, you will have to submit your parent’s documents. PANs are available in different categories, mainly based on annual income. In the student category, you can apply for a PAN even with zero income bar.
PAN is one of the essential documents to start an import-export business.
PAN registration is mandatory for any business. You can apply for a PAN card either at the nearest Registration office or apply online on the official website.
Planning and designing the business model is an essential part. Categorizing your business is also a vital step in the business planning process. Focus on multiple factors in your business plan like your product, your market, logistics & transportation, financial support, staff recruitment, office establishment, legal procedures and formalities, permits of exporting your product, etc. to start the business.
After completing the business plan and related processes. It’s time now to give a meaningful name to your business. Name & logo makes the first impression on people. They should be professional and relevant to your business. Now comes the final step registering your business in the right category; there are various categories like the sole partnership, partnership, limited liability company, and public company. You can select any of them as per your requirements.
Current Bank Account
Current bank accounts are different from standard savings accounts. Most banks apply transactional charges in a savings account if a transaction amount is above a particular limit set by them. While no such limitations or transactional charges are there; however, you also don’t get the benefit of keeping money in the current account. However, it won’t affect you a lot because charges are way more than the interest you will earn.
The bank account used by businesses is called a checking account. Your new export-import business needs a checking account to do business with customers and suppliers. Before thinking about how to start an import-export business, you must get a current bank account. You can choose a bank of your choice, or you can also compare the services provided by banks. The documents required to open a checking account vary depending on the type of business unit.
IEC is an acronym for Import Export Code. It is a unique ten-digit registration code issued by the Government of India’s Directorate General of Foreign Trade (Ministry of Commerce and Industries). IEC is mandatory for starting an import-export business. It is useful for tracking and managing shipments.
People looking for answers to how to start an import-export business? Must note that without IEC, you can’t do anything. You can apply for IEC to DGFT. The documents required are Certificate for IEC Code – ANF-2A or a Pre-printed Cancelled Cheque and Address Proof.
Select Your Product
Your product is the most critical factor in your business. If you are a beginner, here is a pro tip for you instead of searching how to start import-export business research about what products are in high demand, quality standards, and other details. There are several factors you need to keep in mind, such as the state of international markets, regulations, export trends, etc. You can find more detailed information on the internet to guide yourself in the right direction in selecting the right export product.
Pricing the Product
The price of your product plays a vital role in the performance of your import-export business. Price yours according to the others available in your respected market. You are providing a lower rate than others will benefit you a lot.
But generating commission is also essential for the overall business.
Generally, an import/export company’s business model involves two main concepts: the volume of units sold and the commission.
Usually, exporters charge up to 10% to 15% if you manage to charge less than that, then you will create good business relations with clients; however, you can always increase some after a few times.
Registration Cum Membership Certificate (RCMC)
RCMC is another essential document required to proceed with the import-export business. By this, you will register yourself to a highly moderated committee, helping you grow and expand your business.
India has several export promotion committees that are created to promote the export of various products and services. Registration for these councils allows exporters to access events and help them grow their businesses and is also required to access certain benefits under India’s foreign trade policy. The RCMC is valid throughout India and takes approximately one week to write. For example, suppose you are an exporter of processed agricultural or food products. In that case, you can register with APEDA, which has an online registration service on its website.
Find The Right Export Market
Your import-export business depends on choosing the right market place. You may have an excellent product, but you won’t get buyers for it without finding the right market. You need to make sure your export product/service has the right market somewhere in the world. It will take a lot of research to discover it. There are some factors that a new exporter should keep in mind, such as the demand for products, trade barriers, profitability, political environment, etc.
Based on these factors, the exporter has to analyze the feasibility and consequently choose his export market. This is a time taking and complicated process, but the time and energy you put in are worth the results you get. It is always advised to consult experts of your respective product category and market experts regarding the deal. This should be the final answer to your question on how to start an import-export business.
Everything narrow downs here as this is a vital factor for your import-export business. Getting clients is very necessary to keep your business running. Now, this is not a piece of cake, a lot of experience is required to do it on a big scale; however, you can also get opportunities as people are always willing to find better options. You will have to develop your communication skills and formal letter and email writing as well. Building a network is very important. It would be best if you tried to impress clients’ trust and make him stick to you.
There are many ways to collect leads for your product, such as creating a website, registering on buyer-seller platforms, attending trade shows and exhibitions, using government agencies such as export promotion consultancy, etc. If you prove your services or products are better than those available in markets, people will come to you.
This post contains almost all the answers to how to start an import-export business. However, before proceeding, it is advised to consult your legal advisor or mentor regarding the process. I hope this article has cleared your doubts about starting a new import-export business. Still, many things are there to learn, but these are basic, which you need to start your import-export business.
Other important things you will know in the business process itself. This article should be suitable to answer your question of how to start an import-export business. If you still have any doubts, you can share them in the comments.
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