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Importation is the activity of bringing a good or service to a country while exporting is selling products overseas. Importing and exporting business come under the umbrella of import export business and these firms conduct cross-border exchange of goods for payment and vice versa.
Starting an import export company is a lucrative business idea as most people like to buy products from around the world. Businesses around the world import machines, raw materials like crude oil, coal, etc., while individual consumers try to import expensive gadgets, clothes of specific brands, etc. With increasing globalisation, the potential of import export business is rising rapidly.
Import export businesses are firms that conduct businesses with international companies to procure global products and sell homegrown products.
How to start an import export business?
Before learning how to start an import export business you need to pick between import and export and choose your main business activity. You can either start an importation business or an export business.
Importation business explained
Under importation you pick an item that has much domestic demand, import them and sell them to the domestic consumers. India’s top imports include crude petroleum, gold, coal briquettes, diamonds, and petroleum gas.
There are other imports as well fitted for a business startup. India imports electronic products like routers, modems, switchboards, speakers, etc., electronic appliances, leather, silver, cereals, etc.
Export business explained
Export businesses either make their own products or buy products from domestic companies and sell them overseas. India’s top exports include textiles, jewellery, rice, pulses, engineering and machinery products, chemicals, etc. Indian steel exports are also a significant export category.
To start an import export business first you need a business plan which gives you an idea of what you will be importing/exporting. Here is a step-by-step process on how to start import export business in India:
Step 1: Research the export/import market and choose whether you want to export or import
The first step is to do in-depth research into the export import market and make a note of:
- Products in high demand for import and export
- Is importing easy or exporting?
- What are the regulations for starting an import/export business?
- What can I import/export? Are there any restrictions?
- Companies in the export import space
- What is the process of paying suppliers abroad and receiving payments from international customers?
- Tax to be paid for exporting and importing
- The logistics strategy to be followed for cross border goods transportation
Step 2: Pick a product and choose a country
When you research you will find out whether you are interested in export or import. Depending on your choice, pick the product you want to sell. For example, you can import German rotor spinning machines and sell it to textile manufacturers of India.
You can pick a product based on the demand in the domestic market and choose a supplier from a country that gives quality products. Watch out for trade/economic sanctions by India when you pick a country. Currently, the foreign trade policy has put out a long list of sanctions against the Democratic People’s Republic of Korea.
If you have picked export as your business activity you can sell homegrown products like khadi clothes, organic produce, traditional art, etc. Pick a product that can be transported safely with relative ease if you are a beginner. This will also work favorably toward the transportation costs.
Once you establish a strong and safe route to export your chosen product you can expand your product line to include more export worthy items. You will need to find reputable vendors to sell your products, establishments that can guarantee a regular profit for your products.
Make sure the financial transactions can be done easily when you choose a country. Research how a cross border financial transaction is done by other Indian export import businesses. Always remember to calculate the extra costs involved during a cross-border money transfer.
Step 3: Make a business plan
Set up the motto of the business and a clear trajectory of what you want your business to be. Set some short-term goals like no of sales to be achieved in the first quarter and the profit to be generated. This is the time to calculate the overall costs of importing and exporting and the profit you will be able to achieve from your products.
Map out a business strategy and find an answer to these questions:
- How much capital is required to execute the business plan?
- What is the price to be set for each product?
- How to market your products?
- How will you attract new customers?
- What is your target group of customers?
Step 4: Officially establish the company by registering it
Pick a name and a logo for the company. Visit the website of . Scroll down the homepage for an option labelled ‘Register your company’ and right next to it you will be able to spot ‘Company forms download’.
Here you will get a list of forms you can download and fill in for registration. Clicking on the ‘Register your company’ will give you information on the mandatory forms you must fill in. You will also need to know the NIC code of your business to fill up the forms.
Get you IEC (Importer- Exporter Code)An IEC is a 10-character alpha-numeric number allotted to an entity (firm/company/LLP) and is mandatory for undertaking any export/import activities. Without the Import Export Code importers cannot import goods and exporters cannot enjoy the benefits of government schemes under the Foreign Trade Policy.
- Follow these steps to obtain IEC:
- Visit the DGFT website and register
- Login to the website with your credentials
- Hover your mouse on ‘Services’ option given on homepage
- Click on ‘IEC Profile Management’
- Click on Apply for IEC
- Fill the form, upload the relevant documents and submit
Step 5: Chart a logistics strategy
Choose whether you want to outsource your logistics operations or handle them in-house. Since managing a supply chain when it comes to cross border transactions is difficult, most companies hand the process to global freight forwarders.
Many of these freight forwarders offer to arrange the shipping agreements, transit insurance, licenses, permits, tariffs, and quotas associated to shipping to another country. This makes starting an export import business easier by reducing the compliance burden.
Once you have found your supplier, customers and a global freight forwarder, you can start our business. Don’t forget to register your company and satisfy all the compliance requirements before starting.
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What documents do you need to import/export goods?
- Bill of Lading/airway bill/lorry receipt/ railway receipt/postal receipt in form CN-22 or CN 23 as the case may be.
- Commercial invoice cum packing list
- Bill of entry for import and shipping bill/bill of export/postal bill of export for export