You will be very surprised to know that India is the 14th largest exporter of goods and services in the world. According to a recent report by the HSBC India will be among the top 5 exporters by 2030. In last few years the Government of India is aggressively promoting the initiative of "Make in India" which has shown vigorous growth in the number of exporters.
As the technology is upgrading every minute, the world is moving towards even faster services. Nowadays everybody wants to grow their business and it's becoming a trend that medium and big companies want to go global and make more money. But it's not that easy as it seems; there are lot of formalities that you need to do before you enter the international market of trade.
Before starting import/export business it is preferred to register your business in Private Limited or Public limited or LLP format for the convenience of fast loan approvals and ease of doing business with foreign customers as they prefer registered corporate entities. If your business is registered in one of these formats then you are probably one step ahead.
Tax & Licenses Registration
- PAN Card: The Company first of all needs to acquire the PAN card of the company in order to open a bank account. Without a bank account you cannot proceed with any business transaction in the name of the company.
- GST Registration: The Company needs to register its company in the Goods & Services Tax portal in order to claim the input on imports, purchase of raw materials and assets, sale to local or domestic clients.
- FSSAI License: In case your business related to food products then the company needs to acquire FSSAI License and special permission for exporting.
- ESI & PF: In case you are in the manufacturing sector, the company needs to register in the ESI & PF scheme.
- Trade License: Trade license is one of most necessary documents that you need to acquire as all the above organizations may ask for it.
- ISO: Nowadays the companies abroad seek for good quality products and the certification from a reputed quality control board gives a sense of security to the buyer/importer.
Import Export Code (IEC)
The import export code is the most important requirement for the import/export business as without it you cannot import/export by any means. The IEC is a 10 digit code; it is issued by the Directorate General of Foreign Trade (DGFT) having lifetime validity.
Documents required for IEC
- Certificate of Incorporation
- Digital signature
- Identity proof of all the Directors (Passport, Election Card or Driving License)
- MOA & AOA of the company
- Bank Reference Letter
- Company PAN Card
Registration cum Membership Certificate (RCMC)
The RCMC certificate allows the importer to avail special benefits or concession on explicit merchandise. It is granted by the Export Promotion Council/FIEO/Commodity Boards.
Documents required in normal course of business
After attaining the IEC & RCMC there are certain documents that you need to present in front of the customs department in the normal course of business.
- Bill of Entry
- Invoice cum Packing List
- Bill of lading/ Airway Bill
- Insurance Certificate
- RCMC Certificate for special exemption on import duty
Myths about the IEC
- Myth: Every individual or company which does foreign trade needs to have IEC.
- Fact: According to the latest notification of the Government of India IEC is not mandatory for all the traders who are registered under GST. IEC is not mandatory for goods imported or exported for personal use or gift purpose. Import/Export done by registered charitable organizations does not require IEC.
- Myth: The IEC requires renewal after a period of time:
- Fact: The IEC comes with lifetime validity it does not require any Renewal.
- Myth: The companies with IEC registration require filing a return with the DGFT regarding their export transactions.
- Fact: There is no requirement of filing any sort of return with the DGFT; not even the export transactions.