Mandatory Registrations for setting up an Export Business
The Foreign Trade (Development and Regulation) Act 1992, defines export as “taking out of India any goods by land, sea or air”
Export is completed once the goods have left the territorial water of India. In order to qualify as a transaction of export, the following conditions must be satisfied:
- Goods must go out of India
- The foreign exchange must come into India.
Exports are beneficial for a country as they bring in profit; promote economic development and overall growth. For this reason, the government of a country always promotes exports.
To operate the business, an entrepreneur needs to form an organization which can be a sole proprietorship, partnership firm under the Indian Partnership Act, a public limited company or a private limited company registered under the Companies Act, 2013 or even a Limited Liability Partnership.
The most recommended course is to get registered as a private limited company since it offers many benefits such as limited liability protection for promoters, transferability, easy access to bank loans, etc. Furthermore, clients always prefer dealing with a registered corporate entity.
There are a few registrations that are to be done on a mandatory basis to start exporting, these are:
- Registration with Director General of Foreign Trade (DGFT): DGFT provides the exporter with a unique ‘Import-Export Code (IEC)’, a ten digit code required for the purpose of export as well as import. No exporter is allowed to export his goods abroad without IEC number. It is a one-time registration, valid for the lifetime of the organization or proprietor.
However, if the goods are exported to Nepal or Myanmar through Indo-Myanmar border or to China through Gunji, Namgaya, Shipkila or Nathula ports then it is not necessary to obtain IEC number provided the CIF value of a single consignment does not exceed Indian amount of Rs. 25, 000 /-.
Application for IEC number can be submitted to the nearest regional authority of DGFT or “Aayaat Niryaat Form – ANF2A” can also be submitted online at the DGFT website: http://dgft.gov.in. Along with the form, the applicant is required to submit his PAN number, Current Bank Account number, and Bankers Certificate. An application fee is also required to be submitted.
- Registration with Export Promotion Council: EPC is a non-profit organization for the promotion of various goods exported from India in international market. It acts as a platform for interaction between the exporting community and the government.
An exporter must obtain a registration cum membership certificate (RCMC) from the EPC. For this, an application accompanied with a self-certified copy of the IEC number should be submitted. The RCMC certificate is valid from 1st April of the licensing year in which it is issued and shall be valid for five years ending 31st March of the licensing year, unless otherwise specified.
- Registration with Commodity Boards: Commodity Board is registered agency designated by the Ministry of Commerce, Government of India for purposes of export-promotion and has offices in India and abroad. At present, there are five statutory Commodity Boards under the Department of Commerce. These Boards are responsible for production, development and export of tea, coffee, rubber, spices and tobacco.
- Registration with Tax Authorities: Goods exported out of the country are eligible for tax exemptions. To avail this benefit, an exporter must be registered with the Tax Authorities.
- Registration with Central Excise Department: If the items are excisable goods, registration with the Central Excise department is required.
- Registration according to Route of Export: If export is going to be carried out through the sea, registration/membership with the seaport customs is required and in case of export carried out through the air, registration with airport customs is necessary.
In case you need any help with these compliance works, do let us know, I am sure, we could work out an attractive package for you, just for you 🙂