Export Procedures for Indian Businesses: Everything You Need to Know

 

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Overview: Why Export & Key Considerations

Exporting offers Indian businesses access to larger markets, helps scale up production, improves foreign exchange earnings, enhances competitiveness, and may allow better margins. But exporting also brings challenges: regulatory compliance, currency risk, logistics complexity, cultural differences, and more.

Before exporting, a business should assess:

• Market research: demand, pricing, competition, import barriers in target country.
• Product suitability: local tastes, packaging, labelling, quality standards.
• Cost structure: production costs, transport/shipping, duties & taxes, insurance.
• Financial readiness: working capital, foreign exchange arrangements.
• Risk factors: political, trade policy, credit risk of buyer, currency fluctuations.

Regulatory & Legal Framework

Several laws, policies, and agencies govern Indian exports. Key among them:

• Foreign Trade Policy (FTP) of the Government of India (DGFT): includes export‑/import policy, incentives, licensing requirements.
• Customs Act, 1962: governing customs duties, clearances.
• Customs Tariff Act: schedules of duties.
• Goods & Services Tax (GST) laws: implications of exports. Usually, exports are zero‑rated under GST but compliance (invoicing, returns etc.) is essential.
• Export Inspection Council (EIC) and Export Inspection Agencies for quality, health, safety certifications.
• Other Acts and authorities depending on product: e.g. BIS (Bureau of Indian Standards), FSSAI for food, Drugs Controller for pharmaceuticals, Plant Quarantine / Animal Quarantine for agricultural products, environmental compliance etc.

Also, bilateral/multilateral trade agreements (e.g. free trade agreements, preferential trade agreements) impact documentation (e.g. Certificates of Origin) and tariffs on the import side in destination countries.

Pre‑export Preparations

This includes everything a business must do before the actual shipping. Some key steps:

1. Product selection & compliance

   • Ensure product meets the importing country’s regulations (safety, technical / labelling / packaging).

   • Compute the Harmonized System (HS) code for the product to know duty, regulatory aspects.

2. Costing & pricing

   • Include production cost, overheads, shipping, insurance, duties, export incentives, margins.

   • Decide on Incoterm (FOB, CIF, etc.) which determines who bears cost & risk at which stage.

3. Finding buyers, negotiating terms

   • Use trade fairs, B2B platforms, EPCs (Export Promotion Councils), online marketplaces.

   • Negotiate contracts: terms of sale, payment terms (advance, LC, open account), delivery schedule.

4. Supply chain & capacity planning

   • Ensure reliable production, raw materials, packaging materials.

   • Plan for transportation, warehousing, export packaging.

Licensing, Codes, Registrations

Before exporting, the business must ensure it has all required permits and registrations.

A. Import‑Export Code (IEC)

• A mandatory first step: every entity wishing to export goods (or import) from India must obtain an IEC from the DGFT.

• The application is online. Documents typically required: proof of business incorporation, address proof, PAN, bank account etc.

B. Registration with Export Promotion Councils / Commodity Boards

• To avail incentives, benefits, and for certain regulatory/policy compliance, exporters often must register with the relevant Export Promotion Council (EPC) or commodity board.

• Some sectors have specific boards (e.g. AEPC for apparel, EEPC for engineering products etc.)

C. Licensing / Permits Specific to Product

• Some goods are restricted or canalised (i.e., exports allowed only with specific licenses or only via certain agencies).

• Certain products require specific export licenses, e.g. defence/arms, hazardous materials, chemicals.

• For food/plant products: phytosanitary certificates; animal/plant health; for pharmaceuticals: registration / regulatory approvals; for electronics: safety/certification (like BIS) etc.

Quality, Standards & Certification

To ensure acceptance in foreign markets, you must meet foreign buyers’ and regulators’ quality, safety, environmental, ethical, and labeling standards.

• Quality control & inspection via EIC / EIAs. For many notified products, export inspection is mandatory.

• Certifications like ISO, HACCP, GMP, etc., which may be required by buyers or regulatory authorities.

• Certificate of Origin (COO) is often needed to avail preferential tariff benefits under trade agreements.

• Other certificates: health, safety, non‑GM / organic / Fair‑trade etc. depending on import country.

Export Documentation: What You’ll Need

A critical area. Export documentation facilitates customs clearance, payment, regulatory compliance, and smooth logistics. Some documents are mandatory, some are conditional (depending on product, buyer, destination, mode of transport, etc.).

Here are the major documents:

Payment & Financial Procedures

How you get paid, how foreign exchange is handled, and how financial risks are managed.

Payment Methods

• Advance Payment – buyer pays before shipment; low risk for exporter, but harder to get from buyer.

• Letter of Credit (LC) – banks ensure payment if exporter complies with document terms. Common in international trade.

• Documentary Collections – exporter’s bank collects payment or acceptance through documents forwarded to buyer’s bank. Less safe than LC.

• Open Account – goods shipped and delivered, payment due in future. Highest risk for exporter.

Selecting the appropriate method depends on buyer trust, creditworthiness, regulatory environment.

Foreign Exchange Rules

• Realisation of export proceeds must comply with RBI / FEMA regulations. Exports are usually paid in freely convertible currency.

• Indian exporters must get payments realised (i.e. in bank account) typically within a certain time frame (often up to 9 months from shipment) unless otherwise specified.

• Exchange rate risk (fluctuation between commitment and payment) should be managed (maybe hedging, or choice of currency).

Bank Formalities & Documents

• Present export documents to bank for negotiation / collection or after shipment if payment terms allow.

• Documents usually include invoice, packing list, shipping documents (bill of lading etc.), certificate of origin, insurance, regulatory certificates, Letter of Credit etc.

Logistics, Shipping & Customs Clearance

Getting the physical goods from your factory to the overseas buyer involves many moving parts.

Export Packaging and Packing

• Packaging suitable for long‑distance transport (sea, air, road), protection against weather, handling.

• Labeling: contents, weight, origin, handling marks (fragile, orientation etc.), barcodes if needed.

• Comply with any environmental / packaging regulations in destination country (e.g. prohibition on certain materials).

Choosing Mode & Incoterms

• Mode: sea / air / land / rail. Depends on cost, urgency, volume.

• Incoterms: define who bears cost and risk at various points (e.g. FOB, CIF, CIP etc.). Be clear in the sales contract.

Transit, Freight Forwarder, Customs House Agents

• Freight forwarders help with cargo booking, documentation, transport.

• Customs House Agents (CHA) licensed by Indian Customs help with export customs clearance.

Customs Clearance in India

• File the Shipping Bill with customs via ICEGATE (Indian Customs Electronic Gateway).

• The goods are presented for inspection, assessment. Customs verifies value, proper classification (HS Code), documents.

• Pay any duties or obtain duty drawback or remission if eligible.

Shipment & Export

• Once customs clearance obtained, goods released to carrier.

• Carrier issues Bill of Lading / Airway Bill etc. as proof of shipment.

Transit & Destination Handling

• If there are trans‐shipments, ensure documents allow for them.

• On arrival in destination country, import customs, duties etc., possibly requiring certain documents (COO, inspection etc.).

Incentives, Tax Benefits & Duty Drawbacks

To promote exports, the Indian Government provides various incentives.

• RoDTEP (Remission of Duties & Taxes on Exported Products) scheme: export incentive scheme to reimburse embedded duties/taxes which are not otherwise refunded.

• Under the Foreign Trade Policy: various schemes for export promotion.

• Duty Drawback / Refund of Duties: suppliers can apply for refunds or drawback of duties/taxes paid on inputs or certain levies.

• GST Zero-Rating: exports are typically zero‑rated under the GST regime, meaning no GST is charged on export but input credits can be claimed.

• Export Oriented Units (EOUs), SEZs (Special Economic Zones) etc: businesses located in SEZs / EOUs may enjoy special tax/duty advantages.

Risk Management & Insurance

Exporting involves several risks. Being prepared helps.

• Insurance: Cargo insurance to cover loss/damage in transit; also marine, air, or multimodal depending on mode.

• Political / Country Risk: changes in import regulations, political instability in buyer’s country.

• Credit Risk: buyer might default. Use methods like LC, or Letters of Credit confirmed, or export credit insurance.

• Foreign Exchange Risk: fluctuation between contract rate and payment date. Use forward contracts, options etc.

• Logistical Risk: delays, damage, customs hold‑ups. Mitigated by choosing reputable carriers, agents, packaging.

Post‑Export Obligations: Realisation & Compliance

After shipment and payment, there are still several obligations:

• Realisation of Export Proceeds: ensure payment is actually received according to bank/RBI regulations. Timelines (e.g. 9 months) need to be adhered to.

• Document archiving: keep all documents (invoices, shipping docs, certificates) for audit, compliance.

• GST Returns / Refunds / Input Credit: submit necessary returns, claim any refunds owed.

• Filing of Annual Returns: customs/GST etc.

• Compliance with Export Promotion Conditions: sometimes incentives are tied to conditions like export growth, local content, etc.

• After‑sales support: warranties, spare parts, regulatory compliance in destination country.

Challenges & Best Practices

Some common problems exporters face, and ways to address them:

Recent Updates & Trends

Staying updated is vital. Some recent trends / updates relevant to Indian exporters:

• Extension of RoDTEP scheme until March 2026 to continue incentivising exporters.

• Moves to simplify export licensing especially for regulated commodities.

• Increased focus on electronic and digital processes: electronic certifications, online filing (DGFT, ICEGATE), real‑time tracking.

• Greater emphasis on sustainability, environmental standards, social compliance. Buyers abroad increasingly insist on ethical audits, environmental footprint etc.

• Trade agreements and export policy changes: e.g. changes in foreign investment rules for e‑commerce linked exports.

In short - Exporting from India can be highly rewarding, but also involves navigating a web of regulations, documentation, logistics, finance, and risk. The success lies in planning, compliance, using expert help where needed, understanding buyer and regulatory requirements abroad, and staying up to date with policies and incentives.