How to Register an Import and Export Business in India
The import and export business has grown fast in India in recent years. India is an agricultural country, and most people depend on agriculture for their day-to-day living. India produces more agricultural products; hence it helps small-scale industries to step into the import and export business. Another advantage is importing products to India because of its large population. Importing products from another country will also fulfill the needs of the people in India.
This guide will help you understand import and export business, legal licenses, legal procedures, and how to register an import and export business in India. Our main motive is to help you start an import and export business without legal problems.
Before starting your import and export business in India, you should know the following aspects.
1. Experience in import and export business.
2. Define the product for your business.
3. Legal licenses and legal procedures.
You can start your import and export business today if you know all these three steps.
These are the 7 steps involved to register your import and export business.
1. Company Registration
2. Current Account
3. IEC code
4. GST Registration
5. Registration Cum Membership Certificate (RCMC)
6. Product-Related Licences
7. Authorized Dealer Code (AD Code)
You have to register your business as a company or firm to start an import and export business. You will opt to register your company on any of the following five types:
- Proprietorship Firm
- Partnership Firm
- Private Limited Company
- Limited Liability Partnership (LLP)
- One Person Company (OPC)
If you are a beginner, register your company as a proprietorship firm. On the other hand, if you have good experience in the import and export business and a good investment, it is better to register as a private limited company. Moreover, you can avoid most of the risks involved in the industry if you have registered as a private limited company.
You need two persons as directors to register a private limited company. Click here to know more details.
You must open a current account in any bank. You cannot run your business with a savings bank account. Many banks offer current accounts with minimum deposit features. You can either open a current account with national banks (Indian bank, SBI, IOB, etc.) or private banks (HDFC, ICICI, etc.)
Why should you open a current account? This business involves transactions between multiple countries, and the payment can only be sent or received through your current account of your business. For this reason, you must open a current account for your import and export business.
Obtaining an IEC code is mandatory to run an import and export business. What is IEC Code? Importer – Exporter Code is a ten-digit identification number issued by DGFT (Director General of Foreign Trade) and the Government of India. No import and export can be made without having an IEC code.
Benefits of IEC Code
- Anyone can apply the IEC code before starting an import and export business.
- No need to renew the IEC code as it never expires.
- You don’t have to file returns or inform DGFT about the transaction made using this IEC code.
- You will get various benefits from customs and DGFT.
- No annual maintenance fees for the IEC code
Documents required to apply IEC code online
1. Bank Certificate for IEC Code or Cancelled Cheque.
2. Address proof of the company (Lease agreement / Rent agreement / Electricity bill/landline Phone bill / Postpaid mobile bill/partnership deed)
You can apply the IEC code online at dgft website
Every business involved in import and export has to register GST where the company’s turnover is more than 40 lakhs. GST stands for Goods and Service tax. GST can be applied online at https://reg.gst.gov.in/registration/. It will take between 5-7 working days for the process.
A GSTIN will provide to you after approval from the officials. GSTIN is a unique identification number given to all taxpayers.
Documents Required for GST Registration
- Address proof
- Pan card
Private Limited Company:
- Pan card of the company
- Certificate of incorporation
- Article of Association
- Memorandum of Association
- Resolution signed by board members
- Address proof and identity of directors
- Digital signature
Limited Liability Partnership (LLP)
- LLP agreement
- Pan card of LLP
- Partner’s name and address proofs
Registration And Membership Certificate (RCMC)
Each product has a different export council. For example, if you are dealing with agricultural products, you will require an APEDA certificate (Agricultural and Processed Food Products Export Development Authority). On the other hand, while you deal with spices, you will need certification from Spice Board.
This certificate validates the exporters dealing with products that are authorized by the government. Exporters can register under 1) Manufacturing Exporters and 2) Merchant Exporters.
Documents Required to register RCMC:
- Registration-and-Membership-Certificate application form
- Self-certified copy of the IEC Number
- Pan Card
- Demand Draft of Membership Fee to be Paid at Services Export Promotion Council, New Delhi
- Copy of MOA (memorandum of Association)
- Partnership Deed
- Company Registration Certificate
- Last three years Services Export Data
- Board Resolution or Power of Attorney
- GST registration certificate
Note: Submit a photocopy of the above documents while registering.
It is mandatory to obtain licenses based on the products you are dealing with in your business. For example, You would require an FSSAI license for food products. Medical Device Export (Drug) license for medical products.
You cannot export any products without a proper license. Therefore, once you have finalized your product, apply for the required approvals from the official website.
Authorized Dealer Code (AD Code)
AD code is the last step in an import and export business registration. Authorized Dealer Code is a 14-digit number provided by the bank where you have your current account. These numbers are printed on the document with the bank’s letterhead. You can approach your bank and request an AD code.
Exporters must register an AD code with a specific port or airport to ship their goods. Without an AD code, you cannot complete customs clearance of your goods. Once you’ve received the AD code from your bank, the next step is to register the AD code with customs. After that, you can register it on Icegate (Circular No.32/2020-Customs).
In conclusion, you can quickly start your own import and export business if you gain some knowledge, define the right product for your business, and know about the legal licenses and legal procedures. Let me know in the comment section how this guide helped you start your new venture in the import and export business.