To start an import and export business in India, you need a PAN for the business, a registered business entity, a current account in the business’s name and an Importer-Exporter Code (IEC) from the Directorate General of Foreign Trade (DGFT). Before any of that, check that there is a market for your product. After registration come the commercial steps: choosing the product, finding buyers, planning the finances, and lining up a shipping company and a customs broker. This guide takes the steps in that order. For a version that is not specific to India, see how to start an export-import business.
Check that the market is viable
Start with market analysis. You need to know whether there is demand for your product, whether you can sell it at a profit, what trade barriers stand in the way and how stable the political environment of the target market is.
Demand for the product
Research demand for your product in the target market. Find out whether buyers there need it and whether that demand is likely to last.
Profitability
Work out what it costs to make or buy the product and ship it, and the price it can sell for in the target market. The difference has to give you a reasonable return on the money you put in.
Trade barriers
Find out which trade barriers apply. These can be tariffs, quotas or non-tariff barriers such as strict quality standards or complicated customs procedures.
Political environment
Political conditions in the target country can affect your business directly. Look at its political stability, its relations with India and any trade agreements between the two countries.
Get a PAN for the business
The Permanent Account Number (PAN) is a ten-character alphanumeric number issued by the Income Tax Department of India. It is used to track an organization’s financial transactions and taxes, and it is the starting point for every other registration in this guide, including the IEC. You can apply for a PAN for your import-export business online. The application needs proof of identity, address and date of birth of the applicant.
Register your business
Choose a business structure. The options in India include sole proprietorship, partnership firm, limited liability partnership (LLP), private limited company and public limited company. Each has its own advantages and disadvantages for liability, tax and compliance, so ask a lawyer or chartered accountant which one suits your business.
Open a business bank account
Open a current account in the name of the business to handle its payments and receipts. The documents depend on the business structure, but usually include the business registration certificate, the PAN card, and address and identity proof of the owner or directors. You will need the bank details for the IEC application.
Obtain an Importer-Exporter Code (IEC)
An IEC is compulsory for importing or exporting goods from India, apart from some exempt categories such as government departments and individuals importing or exporting for personal use. DGFT issues it, and since 2017 the IEC number has been the same as the business’s PAN, so it is ten alphanumeric characters long. Only one IEC is issued against a single PAN.
You apply online on the DGFT website in form ANF-2A, uploading proof of the business address and a cancelled cheque or bank certificate, and paying the application fee. Under chapter 2 of DGFT’s Handbook of Procedures, you must update your IEC profile online at least once a year, and within 30 days of any change in the firm’s constitution, address or bank details.
Understand how GST applies
Goods imported into India attract integrated GST (IGST), which customs collects at the time of clearance along with customs duty. Exports are zero-rated supplies under section 16 of the Integrated Goods and Services Tax Act, 2017. A GST-registered exporter can export under a bond or a Letter of Undertaking (LUT) without paying IGST and claim a refund of unused input tax credit. Ask your chartered accountant whether and when your business needs to register for GST.
Select the product you want to export
Pick a product with strong demand in the target market and a good margin, ideally one you already know well. The list of businesses that are easy to export is a starting point. Find out which regulations and standards apply to the product in the target market.
On the Indian side, the product’s tariff classification decides the customs duty, the import or export policy that applies to it and whether a licence is needed. Get the classification right before you quote a price; the method is explained in this practical guide to the General Rules for Interpretation.
Find buyers for your products
Online platforms, trade fairs and exhibitions are the usual ways to meet buyers, and some businesses hire an export promotion agency or a trade representative. There are practical tips on finding reliable importers online.
Prepare financial projections
Write a financial plan that lists every expected cost: procurement, shipping, marketing and overheads. Add the expected revenue and a break-even analysis. A financial adviser can help you build it, and it should cover how you will be paid and how you will fund orders, which is where trade finance instruments such as letters of credit come in. Export incentives can change the numbers too; see Indian export duty savings schemes.
Choose a shipping company
Choose a reliable shipping company that can deliver your products safely and on time. Compare their experience, reputation, coverage and rates. If you plan to sell through online channels, read about e-commerce solutions for export-import businesses.
Work with a licensed customs broker
Customs procedures can be complicated, so many new importers and exporters hire a customs broker. In India, customs brokers are licensed under the Customs Brokers Licensing Regulations, 2018. A broker can explain the customs duties, taxes and documents that apply to your goods and handle the clearance formalities for you.
Questions people ask
Which business is best for import in India?
India’s top imports include mineral fuels and oils, gems and precious metals, electrical machinery and equipment, machinery and computers, organic chemicals, plastics and plastic articles, animal and vegetable fats and oils, iron and steel, optical, technical and medical apparatus, and inorganic chemicals. Large import categories show where demand is, but they also have established competition. The report on India’s top export and import commodities by HS code has the figures for 2015 to 2023.
How much does it cost to start an import-export business in India?
The start-up costs are obtaining the IEC, registering the business, opening a bank account and buying the first stock. After that come running costs for shipping, marketing and overheads. The total varies widely with the product, the target market and the scale of the business.
Which export business is most profitable in India?
Profit depends on your own costs, buyers and markets, so no sector is profitable by default. That said, some of the most profitable export businesses in India are in clothing and textiles, mineral fuels and oils, raw ingredients, pharmaceuticals, jewelry and leather products.
If you need help with classification or compliance questions while setting up, you can get in touch.