India has emerged as a major exporter of various products to many countries around the world. An export business can be highly lucrative if set up and managed properly. This guide will provide tips on how to start export business in India successfully.

Export Business Opportunities in India

India offers tremendous opportunities for exporters due to following factors:

• Abundant natural resources that provide raw materials
• Skilled and low-cost manpower
• Government incentives and schemes for exporters
• Expanding production capacities
• Improving infrastructure like ports and logistics

Some of the top exporting industries from India include:

Industry	Major Exports
Agriculture	Rice, tea, spices, cashews
Textiles	Cotton yarn and fabrics, woolen goods, silk
Gems & Jewelry	Diamonds, gold jewelry, precious stones
Engineering Goods	Auto parts, industrial machinery, tools
Chemicals	Dyes, cosmetics, petrochemicals, pesticides
Pharmaceuticals	Generic drugs, vaccines, traditional medicines
Handicrafts	Carpets, leather goods, art ware, furniture
IT Services	Software services, business process outsourcing

This shows the wide range of export opportunities available across sectors in India. Focusing on such growing export industries can provide good business prospects.

Essential Steps to Start Export Business

Starting an exporting company requires systematic planning and preparation. The key steps are:

1. Conduct Export Market Research

Thorough export market research across products and countries is vital for success. Important aspects to analyze:

• Export demand for products in target countries
• Competitor analysis
• Distribution and pricing analysis
• Export incentives and trade agreements
• Legal and regulatory requirements

Such research provides clarity on best export product selection and target export markets.

2. Select the Right Export Product

Choose export products wisely based on:

• Products with adequate domestic supply or production capacities
• Products meeting international standards and quality norms
• Analysis of global demand and growth trends
• Higher profit margins compared to domestic sales alone

For example, Indian agro products like rice have huge export advantage due to high domestic output and demand abroad.

3. Choose the Right Export Market

Prioritize export countries based on:

• Size and growth rate of import market
• Ease of doing business index
• Trade relation ease with India
• Geographic distance and connectivity

For instance, the Middle East and Southeast Asia offer easier access for Indian exporters.

4. Select Appropriate Export Business Model

Different export models include:

• Export trading – Sourcing goods domestically for exporting
• Manufacturing – Making products within India for exports
• Services like software and IT enabled services

Choose suitable option aligning with products, target markets and capabilities.

5. Arrange Export Finance

As exporting requires significant upfront spending, evaluate funding options like:

• Commercial bank loans – Options like foreign currency loans, export credit loans, etc.
• Govt. financial support – Schemes by Exim Bank, ECGC limited, etc.
• Private equity investment – Angel networks and venture capital funds

Estimate working capital needs for smooth flow of export operational and promotion expenses.

6. Handle Export Logistics

Proper shipping and export documentation ensures timely delivery compliance. Key aspects include:

Export Logistics Stage	Key Activities
Pre-export planning	Checking product demand, export quotas, buyer standards
Procurement	Ensuring right domestic supply quantity and quality
Warehousing and packaging	Meeting packing needs, labeling norms of destination country
Transportation mode selection	Choosing suitable option like sea, air or land route
Freight forwarding	Coordinating with freight forwarders for optimized logistics
Export customs clearance	Getting right papers, invoice, certificates for customs
Payment collection	Managing trade laws, payment modes and foreign exchange

Robust coordination is must across this export supply chain.

7. Manage Export Marketing and Promotion

Effective overseas marketing enables reaching more buyers. Main initiatives:

• Appointing foreign sales representatives
• Participating in international trade fairs
• Placing ads in export directories and portals
• Running digital marketing campaigns in target countries
• Offering competitive pricing and payment terms

This boosts product visibility and generates export orders.

8. Ensure Export Quality and Compliance

Meeting international compliance criteria is essential:

• Product quality certification like ISO standards
• Export inspection by agencies like EIA
• Testing and labelling norms set by overseas regulators
• Packaging and documentation laws in destination countries
• Intellectual property protection of brand names, logos, product designs etc.

This facilitates quick customs clearance and acceptance in export markets.

Government Export Benefits and Incentives

The Indian Government provides extensive assistance to boost exports across sectors through:

Financial Incentives

• Duty drawback schemes – Refund of customs and excise duties on inputs for exports
• Export promotion capital goods – Rebate of taxes on capital goods for export production
• Export credit insurance – Insurance cover by ECGC Ltd on foreign trade transactions
• Tax exemptions – Income tax deductions on export profits

Infrastructural Support

• Special Economic Zones – World-class infrastructure for export-oriented manufacturing
• Electronic and paperless trade interfaces – Simplifying export procedures and paperwork

Institutional Support

• Export promotion councils – Providing export marketing assistance for specific industries
• Export inspection agencies – Carrying out mandatory quality testing of exports
• India Trade Portal – Offering online export assistance and information services

Leveraging these incentives enhances competitiveness and success internationally.

How to Obtain an IEC Export Code

An important preliminary step is getting an Importer Exporter Code (IEC) from DGFT.

This unique identity code is mandatory for enterprises to export from or import goods to India. It consists of ten alphanumeric code like AAACB1234C.

Eligibility Criteria for IEC

All entities/individuals engaged in cross-border trade can apply for an IEC code if they have:

• Active GSTIN number, PAN or TAN number
• Established business place in India for carrying out export-import
• Specified form and supporting documentations

How to Apply for IEC online?

The entire IEC application process is online through the DGFT portal with these steps:

1. New applicants must first register themselves on the portal. Existing applicants can directly login their profile for IEC application.
2. Select the application for IEC code. Fill in personal and company details in the forms.
3. Attach necessary documents like PAN card, GST certificate, passport photo, etc.
4. Pay the specified IEC application fee online.
5. Submit the IEC application form on DGFT website.

The IEC approval is provided online within 2-7 working days after verification of documents and details provided. Applicants can then download the registered IEC certificate with allotted code.

Features of IEC Code

Some useful attributes of having an IEC number include:

• Single number valid for lifetime – Unlike older system requiring annual renewal
• Recognized globally – Preferred by customs and banking authorities worldwide over other codes
• Easy document submissions – Allows fast online DGFT notifications on trade activities
• Simplified business processes – Avoiding unnecessary paperwork delays

Hence, easy digital access to IEC code offers convenience for Indian export-import players.

Key Registrations Needed for Exporters

Along with IEC code, exporting businesses should also obtain other crucial operational registrations.

Top government and tax registrations to acquire:

Government Registrations

• Shops & Establishments License – For setting up export company office or warehouse facilities
• MSME Udyog Aadhar – For special government benefits to micro, small and medium export enterprises
• GST Registration – For claiming input tax credits, return filing compliance

Tax & Banking Registrations

• PAN Card – Mandatory for all financial transactions including foreign trade
• Import Export Code (IEC) – Required identity number for exports and imports
• Certificate of Incorporation – Legal business registration proof for corporate export firms
• Current Account – Needed for foreign exchange transactions with overseas buyers and suppliers

Besides these, specific export sectors may require further registrations and licenses like FSSAI certificate, trade mark registration, RCMC certificate etc.

Proper documentation enables commencing export activities smoothly as well as availing different export promotion incentives. Hence, exporters must ensure completing all essential registrations.

Types of Risks Involved in Export Business

Exporting brings immense opportunities but also entails significant risks that companies must manage diligently:

Financial Risks

• Foreign exchange volatility – Changes in currencies affecting transaction values
• Non-payment risk – Exporter not receiving payments from overseas buyers on time
• Higher funding and insurance costs – Need for extensive loans and credit insurance

Operational Risks

• Logistical delays or failures – Errors in freight or customs clearance processes
• Quality or regulatory issues – Rejection of products in foreign ports over regulations
• Lack of export order visibility – Inability to accurately forecast export revenues

Strategic Risks

• Intense competition – From low-cost manufacturing countries like China or Vietnam
• Geopolitical instability – Changes in overseas countries affecting business environment
• Demand fluctuations – Global recession or downturn reducing export markets

Robust export risk management across these areas are vital through steps like securing export finance, cargo insurance, tying up with logistics partners, expanding to diversified export markets and maintaining competitive edge.

Managing Export Payment Risks

A key risk that exporters encounter is the possibility of not receiving payments from foreign buyers on time or at all either due to willful default or other issues.

This non-payment or delayed payment can severely impact exporter’s working capital cycle and revenues.

Some effective ways for exporters for mitigating payment risks include:

• Having clear payment terms and methods documented in export contracts like advance payment, LC, CAD etc.
• Checking overseas client credit reports and financials through banks/credit rating agencies
• Obtaining export credit insurance cover from ECGC
• Using escrow account mechanisms via third-party banking channels
• Seeking usance letter of credit allowing delayed payment within 6 months
• Inserting penalty clauses in export agreements to deter payment delays

Deploying prudently such payment risk management tools reduces chances of export order defaults.

Conclusion

Exporting provides attractive business prospects for Indian companies to reach global markets and spur growth. By selecting the right products and countries, arranging export financing, handling logistics efficiently and managing risks suitably, Indian firms can build sustainable and profitable export channels.

Leveraging all available government export assistance schemes also enhances competitiveness internationally. With sound planning and effective execution, exporting can drive immense success for Indian businesses.