Complete Guide About Export Business in India.

Feb 28, 2023

What is Export Business?

Exporting or Export Business is the process by which businesses from one nation sell their products and services to clients or customers in another nation.

Selling products and services made in one nation to clients in another is known as Export Business. It includes the transfer of products and services over international boundaries, and firms of all kinds, from tiny start-ups to massive multinational conglomerates, may engage in it.

How to start Export Business in India?

How to start Export Business In India.

The procedure of establishing an Export Business in India might be complicated, however, the following basic processes should be taken into account:

  • Selecting a product or service to export Do market research to identify demand, competition, and price for a product or service that has a potential market in other nations.
  • Registering your company: You should file a business registration with the Registrar of Companies (ROC) or other relevant government departments. Choose a business-friendly legal form, such as a partnership, sole proprietorship, or private limited company.
  • Acquire the relevant licenses and permissions, such as an Import-Export Code (IEC) from the Directorate General of Foreign Trade, in order to export products from India (DGFT).
  • Obtain capital for your export firm by identifying your financing requirements. This might include loans, equity investments, or government exporter assistance programs.
  • Create connections with buyers: Using trade exhibitions, internet marketplaces, and other channels, locate prospective customers and create connections with them.
  • Create a logistics and supply chain management plan: Create a strategy for handling shipment, customs clearance, and delivery.
  • Adhere to export laws: Make sure your export company complies with all applicable export laws, including those pertaining to taxes, customs, and international trade restrictions.
  • Create a powerful team: Recruit a group of experts to help your export firms, such as attorneys, accountants, and customs brokers.
  • Put quality control measures into place: Put quality control measures into place to make sure that your goods and services adhere to laws and standards throughout the world.


Documentation & Licensing requirements for Export Business?

Here is the list of documents required for starting Export Business in India.

Import-Export Code (IEC): An exporter must register for an Import-Export Code (IEC) with the Directorate General of Foreign Trade (DGFT). Every export/import operation needs this 10-digit number.

Registration with export promotion councils: To be eligible for export advantages including duty drawbacks and export incentives, an exporter must register with the appropriate export promotion council.

Bill of Lading: For all shipments, a Bill of Lading is a document that acts as evidence of the transportation of the goods.

Commercial Invoice: A commercial invoice is a document that lists the products being exported together with their specifications, cost, and payment conditions.

A packing list is a document that lists information on the items being sent, including their amount, weight, and dimensions.

An insurance certificate is a document that describes the insurance coverage for the items being exported.

A certificate of origin is a document that details the country of origin of the products being exported.

Certain items need a quality control certificate from an appropriate body, such as the Bureau of Indian Standards (BIS) or the Food Safety and Standards Authority of India (FSSAI) (BIS).

Benefits of Doing Export Business?

Following are some benefits of Doing Export Business in India.

Improved income: By reaching out to new markets and clients, exporting may greatly boost a company’s revenue. Also, it may act as a safeguard against domestic market economic downturns.

Diversification: By exporting, firms may broaden their clientele and lessen their reliance on certain markets or clients.

Improved competitiveness: By exposing a company to novel technology, procedures, and concepts, exporting may make it more competitive. This may spur creativity and boost productivity.

Economies of scale: By increasing production quantities, which may result in reduced per-unit costs, exporting can assist enterprises in achieving economies of scale.

Increased brand awareness: Exporting may assist companies in establishing a worldwide presence and enhancing their brand recognition, both of which are advantageous to their local operations.

Access to new talent and resources: By exporting their products and services, companies may get access to new employees, partners, and resources that will boost their productivity and competitiveness.

Government support: Governments often provide financial incentives, export promotion initiatives, and access to export-related information and resources to enterprises that export.

Government Schemes in support of exporters?

Schemes that provide exporters with insurance or guarantees against the risk of non-payment by international clients are known as export credit guarantee programs. This aids exporters in reducing the cost-related risk of exporting.

Export promotion programs are designed to promote and assist exporters in extending their international markets. Trade exhibits, market research, business trips, and cash incentives for export-related activities are a few examples of such programs.

Export financing programs: These programs provide working capital, loans, and credit facilities to exporters as financial support. The costs of manufacturing, transportation, and other export-related charges may be paid for using these monies.

Duty drawback programs: These programs provide a reimbursement of the tariffs paid on imported components and raw materials used in the manufacture of exported products. For exporters, this lowers their manufacturing costs.

Special economic zones (SEZs) are places that have been set aside where companies may take advantage of reduced customs processes, favorable tax rates, and other incentives to encourage production geared toward exports and foreign investment.

Export processing zones (EPZs) are designated locations that, like SEZs, provide enterprises with a variety of incentives to promote export-oriented manufacturing, such as exemptions from certain taxes and tariffs.

Exporters may use these funds to get financial support for things like product development, market research, and other efforts targeted at increasing their international markets.

Categories in which India leads the Export?

India exports more than 25% of all jewelry worldwide, making it the biggest exporter of diamonds and jewelry in the world. India is a prominent participant in the world jewelry business because of its talented artisans and plentiful supply of raw materials.

Pharmaceuticals: With a market share of over 20% worldwide, India is a significant supplier of generic medications. The nation boasts a sizable labor pool that is trained and reasonably priced, as well as a robust research and development industry, all of which have contributed to its rise to prominence as a top manufacturer of high-quality, low-cost medicines.

India is the world’s second-largest producer of textiles and apparel as well as an exporter of such items. The nation is becoming a significant participant in the global textiles industry because of its ample supply of raw materials and trained labor force.

India is the world’s top producer of several agricultural products, including rice, tea, spices, and other food items. Moreover, the nation is a significant supplier of processed commodities such as frozen shrimp and basmati rice.

India is a worldwide leader in information technology (IT) services, accounting for a significant portion of the global market for IT outsourcing. Due to its enormous pool of highly qualified IT specialists and affordable labor expenses, the nation is a popular choice for businesses wishing to outsource IT services.

Vehicles and auto components: With some of the world’s largest auto manufacturers working there, India is a significant autos and auto parts exporter. India is a desirable location for international investment in the automotive industry due to its affordable labor costs and hospitable business climate.

GST Benefit for Exporters

GST Benefits for Exporters in India

Simplified Taxation: GST replaced various taxes with a single tax, simplifying the tax system for exporters. Before the implementation of GST, exporters were required to pay numerous taxes, including excise duty, VAT, and service tax.

Export Zero-Rating: Exports are regarded as zero-rated supplies for the purposes of the GST. This implies that exporters are eligible to get a refund of the GST they paid on the materials used to create their products. For exporters, this has drastically lowered their manufacturing costs.

Easy Compliance: By establishing a single online gateway for all GST-related operations, GST has made compliance for exporters simpler. This has made the procedure for submitting Tax returns and requesting refunds simpler.

Faster Refunds: Under the GST, exporters have a limited time to request a refund of the unused input tax credit. The government has also implemented an online system for submitting refund claims, which has sped up and improved the procedure.

Government-sponsored export incentive programs include the Export Promotion Capital Goods (EPCG) program and the Merchandise Exports from India Scheme (MEIS). These programs provide exporters cash and other incentives to promote exports.

Decreased Travel Time and Costs: By implementing an e-way bill system, the GST has streamlined the interstate transportation of products. Due to the shortened transit time and lower costs for exporters, Indian products are now more competitive in the international market.

Other incentives for Exporters

Apart from GST which is available for the exporters under various schemes like duty drawback etc.

Exporters may import capital goods at reduced rates of duty under the Export Promotion Capital Goods (EPCG) Programme. This program enables exporters to import capital equipment at zero or minimal duty rates for use in pre-production, production, and post-production. The duty that was saved may be used toward other company costs.

MEIS, or the Merchandise Exports from India Plan, is a program that rewards exporters with tariff credit stamps. These scripts may be sold in the market to generate money or used to pay customs charges on imported products. The program offers rewards for exporting a range of products and services.

Service Exports from India Scheme (SEIS): This program offers incentives to Indian companies that export services. In accordance with this program, service exporters are eligible to receive incentives in the form of duty credit slips for the export of certain services.

Duty Drawback Scheme: Under this program, exporters are eligible to get a reimbursement of the customs duties they paid on the imported materials used in the production of their exported products. The customs tax paid on the inputs used to create the export product is utilized to determine the drawback amount.

Interest Equalization Scheme: This program lowers the cost of credit for exporters by subsidizing interest rates. Exporters may get a 3% or 5% refund under this program on interest paid on pre-shipment and post-shipment credit.

Exporters are protected by the Export Credit Guarantee Corporation (ECGC) Programme against foreign customers who fail to pay the export earnings. This program promotes exporters to look into new markets while assisting them in reducing the risk of non-payment.

Scenarios wherein payment of tax refund not applicable in Export Business

Like for services like for exporters who have claimed the procurement of material/ capital goods under each license

Exports that are “zero-rated”: In certain nations, a specific class of exports is exempt from paying taxes. Since no tax was ever paid in the first place, no tax refund can be requested.

Minimum export threshold: In nations where there is a minimum export threshold, companies must export a certain volume of products or services to qualify for a tax refund. A company may not be eligible for a tax refund on its exports if it falls short of this requirement.

Taxes that are not refundable: Excise taxes, for instance, may not be refundable on exports. In other words, even if a company pays these taxes on its exports, it may not be able to get a refund.

Administrative problems: In certain instances, administrative problems, such as missing paperwork or erroneous documentation, may prevent enterprises from claiming a tax return on their exports. Before requesting the return in such circumstances, the company may need to resolve administrative problems.

How to attain the benefit of reduced cost of raw material for import of raw materials?

Do market research to find the suppliers that are the most reasonably priced in the nations where the raw materials are produced. Businesses will be able to compare pricing and choose the most affordable provider thanks to this.

Negotiate with Suppliers: After identifying potential suppliers, firms may bargain with them to secure the best deals. This can include haggling over group discounts or requesting more favorable payment conditions.

Find government initiatives: Companies may search for initiatives from the government that provide financial benefits for importing raw materials. For instance, several nations provide duty drawback plans or tax exemptions for imports utilized in the creation of exports.

Investigate Free Trade Agreements (FTAs): Companies might look for FTAs between nations that lower or remove import taxes on certain raw commodities. For the importer, this may translate into considerable cost savings.

Improve Logistics: Companies may improve their logistics by selecting the most cost-effective transport options and routes. Depending on the distance and urgency of the cargo, employing a mix of sea, air, and land transportation may be necessary.

Use Technology: Companies may utilize technology to simplify and cheaper their import procedures. This can include ordering and monitoring goods online or utilizing automated technologies for customs clearance.

How Export Business are being done from Special Economic Zone 

Special Economic Zones (SEZs) are areas that have been designated in a country where businesses may take advantage of several tax and other benefits to promote exports and attract foreign investment. The exporting procedure from SEZs in India is governed by both the SEZ Act of 2005 and the Government of India’s Foreign Trade Policy.

Register for SEZ services: Before a firm may export from an SEZ, it has to register with the relevant SEZ authorities and get the required certificates and permissions.

Produce goods or services: The SEZ unit should produce goods or services with an export focus, and the money obtained from these exports must be in foreign currency.

Issue invoices for goods or services and accept payments in foreign currency via approved banking channels are the responsibilities of the SEZ unit.

Submit a Shipping Bill: The SEZ unit must submit a Shipping Bill to the customs authorities together with any other paperwork, including invoices, packing lists, and other papers pertaining to exports.

The SEZ unit must provide the necessary paperwork to the customs authorities, including the Shipping Bill, invoices, and other pertinent documentation.

Claim export advantages: In accordance with the Foreign Trade Policy of the Government of India, the SEZ unit may claim export benefits, such as an exemption from paying certain taxes and levies.

How Export Business are being done from the STPI units 

The Ministry of Electronics and Information Technology (MeitY) of the Government of India oversees Software Technology Parks of India (STPI), an independent organization. To encourage software exports from India, especially from smaller cities and towns, STPI units have been established.

The Export of Services Regulations, 2005, and the Government of India’s Foreign Trade Policy control the export of software and services connected to it from STPI entities.

The basic procedures for exporting from an STPI unit are as follows:

  • Register for STPI services: Before exporting from an STPI unit, a firm must first register with STPI and get the required certificates and permissions.
  • Create software goods or services: The STPI unit should create software products or services with the goal of exporting them, and the money earned from these exports must be in foreign currency.
  • Issue invoices for software goods or services and accept payments in foreign currencies via approved banking channels. This is the responsibility of the STPI unit.
  • Export Declaration: During the allotted period, the STPI unit must submit an Export Declaration to the relevant STPI authorities.
  • Provide appropriate documents: The STPI unit must provide the STPI authorities with the necessary paperwork, including invoices, export declarations, and other pertinent documentation.
  • Claim export advantages: In accordance with the Foreign Trade Policy of the Government of India, the STPI unit may claim export benefits, such as exemption from paying certain taxes and levies.


Frequently Asked Questions:

GST Refund Challenges for Exporters

GST Refund Challenges for Exporters

It’s a harsh reality, especially in this fully automated GST refund era, wherein document sharing and verification between the GST Authorities and taxpayers should be a seamless process, yet it is hard for the exporters to get their GST refunds with ease and...

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1. Is GST compulsory for export in India?

No, GST is not applicable for exports in India. Export goods and services are considered as zero-rated under GST, which means no tax is levied on them. However, exporters can claim a refund of the GST paid on the input goods and services used in the production of the exported goods or services.

2. Who gives license to exporters in India?

The Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry, Government of India is responsible for issuing the license to exporters in India. DGFT issues the Exporter Importer Code (IEC) which is a 10-digit unique identification number required for any person or business to import or export goods and services from India. It is mandatory for all exporters to obtain the IEC from the DGFT before exporting any goods or services from India.

3. What are the documents needed for Export?

The documents required for exporting goods from India depend on the type of goods, mode of transportation, and country of destination. However, some common documents needed for export from India are:

  1. Export Invoice: It is a commercial document that contains the details of the goods being exported, their value, and other information required for customs clearance.
  2. Shipping Bill: It is a document filed with customs that contains information on the nature of the goods, quantity, value, and destination.
  3. Bill of Lading: It is a document issued by the shipping company that acknowledges the receipt of goods and provides evidence of the contract of carriage.
  4. Packing List: It contains the details of the goods being shipped, such as weight, quantity, and dimensions, and is used to facilitate customs clearance.
  5. Certificate of Origin: It is a document that certifies the origin of the goods and is required for customs clearance in the importing country.
  6. Insurance Certificate: It is a document that certifies that the goods being exported are insured against loss or damage during transportation.
  7. Export License: It is a document required for exporting certain goods that are subject to export control regulations.
  8. GST Invoice: It is a document that contains the details of the goods being exported and the tax paid on them.

The exact documents required for export may vary depending on the country of destination and the nature of the goods being exported.

4. Which product is most exported from India?

Some of the most commonly exported products from India include:

  1. Petroleum products
  2. Gems and jewelry
  3. Pharmaceuticals
  4. Textiles and garments
  5. Engineering goods
  6. Chemicals and allied products
  7. Agriculture and allied products
  8. Iron and steel
  9. Electronic goods
  10. Leather and leather products

5. Is export income tax free in India?

Export income in India is not entirely tax-free. However, exports are considered as zero-rated supplies under the Goods and Services Tax (GST) system in India, which means that no GST is levied on exports. Moreover, exporters are eligible for certain tax benefits and exemptions, such as exemption from payment of Integrated Goods and Services Tax (IGST) on exports, exemption from payment of Central Sales Tax (CST), and refund of accumulated input tax credit.

Are you also struggling with your GST Refund?

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