How to Export from India for Small Businesses and Medium Enterprises

India’s MSME sector has tremendous growth potential and the sector contributes to nearly one-third of the country’s GDP. It is also responsible for driving around half of India’s exports.

With the growing focus of the Indian government on boosting export capacity, now is the right time to take your business global.

Today, several opportunities exist for MSMEs to integrate themselves into global supply chains and lead the frontiers of Indian exports.

Thinking of taking your small business to international markets but not sure how to do it?

Today we will tell you how you can expand your small business internationally, what are the necessary documentations required for export, and a lot more.

 

Market Research, Targeting, and Identifying Export Ready Products

From Surat to Salem and Amritsar, businesses from all around India are selling locally made products to the world.

How you can do it?

The first step to starting your export journey is understanding the market. This can be done by conducting market research, analysing demand, and knowing your target audience.

If you already have a well-established business in India then first identify the countries with potential customers for your existing products. Also, identify top products that are growing in demand among international customers.

Why? Because it is not necessary that your herbal products would enjoy the same kind of demand in Saudi Arabia when compared to Europe. So do your research well before starting your export journey.

Moreover, identify the opportunities that e-commerce exports offer. With the growing trend of online shopping, increasing your e-commerce presence can be a great way to cater to the demands of international customers.

SMEs like yours can make their unique mark on the international stage by leveraging competitive advantages like cultural uniqueness, cost efficiency, and quality craftsmanship. However, as an Indian exporter, it becomes extremely crucial for you to meet the expectations of foreign buyers and ensure compliance with international standards, such as quality checks and certifications.

 

Regulatory Framework and Compliance

As a seller exporting from India, you are required to adhere to a regulatory framework and have all the necessary documents required to export to the destination country. For instance, obtaining an Import Export Code (IEC), issued by the Directorate General of Foreign Trade (DGFT), is one of the key requirements in India. Other things like GST filings, shipping bills, and certificates of origin, play a critical role in facilitating smooth transactions.

Additionally, knowledge of export promotion schemes like RoDTEP and SEIS, along with proper documentation, can provide you with financial benefits.

Necessary Documents Required to Export from India

Bill of Lading

One of the essential documents for export-bound cargos, Bill of Lading is issued by the carrier. It represents a contract and a receipt between the shipper and the carrier.

Under this Bill, the carrier acknowledges that the goods received from the exporter are in good condition and can be shipped immediately.

Commercial Invoice cum Packing List

Recently, as per Government regulations, two documents, namely the Packing List and Commercial Invoice (required by Customs) have been combined into one.

Commercial Invoice: A necessary document for export, it is prepared and submitted to Customs by the exporter once the products are ready. The customs signature is required before the shipment begins.

Packing List: This is what you will need if your cargo contains more than one product. This document is prepared by listing the different items that need to be exported.

Shipping Bill or Bill of Export

It is a customs document which is required to get clearance for exports from customs. Issued by the Indian Customs Electronic Gateway (ICEGATE), it is treated as a mandatory document, and the exporter cannot ship goods until the Shipping Bill is filed.

(ICEGATE provides electronic filing of Shipping Bills).

Proforma Invoice

Need advance payment from committed customers? Then this is what you require.

This document comprises of details about the product, delivery type, price, payment method, and other things. It thus serves as an agreement between the seller and the buyer based on trust.

Export Order/Purchase Order

Once the Proforma Invoice is issued, the buyer confirms the order through a PO (Purchase Order) with the exporter. This document comprises details from the buyer’s side, stating specifications of goods like cost, currency, shipping details, and their requirements.

Certificate of Origin (COO)

This certificate is used to provide information like the country of origin of the goods or simply the place where goods have been produced. It is generated for each of the items in the parcel, and serves as an affidavit attached to the commercial invoice.

Bill of Exchange (BE)

This document instructs the buyer to pay the amount stated by the exporter. It is generated by the exporter to update the importer about the payment.

Letter of Credit

Letter of Credit is issued by the buyer’s bank to confirm payment to the exporter on the date that has been committed, in case there is a delay by the buyer in paying the bills. This document serves as a guarantee by the bank to honor the buyer’s purchase order.

Inspection/Quality Check

While shipping products, the exporter must prepare the quality inspection certificate if an importer requests for inspection. A quality inspection may be requested by the importer before the shipment of goods.

Phyto Sanitary Certificates and Fumigation Certificates

Demanded by the importer, these certificates are key to ensuring product quality as per international standards and norms. The Phyto-sanitary certificate is compulsory when shipping agricultural commodities from India. When exporting agricultural produce, you must regulate this certificate.

 

Different certifications are required by different countries depending on product ranges or categories. These documents or certifications offer insight about the item, its destination port, and are necessary for taxation and quality control.

 

Logistics and Supply Chain Management

A good shipping partner can make or break your export process. But how do you decide who’s right for your business?

SMEs must evaluate logistics providers based on their international shipping experience and value-added services including customs clearance and insurance.

You want someone who knows the process inside out and can handle different regulations smoothly.

Further, compare the rates of different service providers and choose the one that best suits your business needs. The value-added services offered by service providers can save you a lot of headaches. For instance, real-time tracking can prove to be a game-changer.

A good shipping partner ensures timely delivery and offers real-time tracking. In this way, you can minimise risks, like lost shipments or delays. This ensures that your goods get to the customer without a hitch.

So, it is not just about cost. Choosing the right partner for international shipping is a lot more about reliability and service quality.

Be extra cautious while picking your logistics partner, as it goes a long way in ensuring successful export business.

Understanding Payment Methods and Risks

Choosing a suitable payment method helps lower financial risks in exports. Options like Letters of Credit and Advance Payments, among others offer varying levels of security.

When exporting through eCommerce, the payment settlement methods can be classified as follows:

• Integrated payment services by eCommerce platforms
• Online payment gateway service providers
• International money transfer services through agents

Protect yourself against non-payment and other uncertainties by leveraging export insurance coverage such as the one offered by ECGC (Export Credit Guarantee Corporation).

Manage foreign exchange risks through forward contracts or hedging.

Support and Resources for SMEs

The big question? Why is it the perfect time to start exporting from India as a small and medium sized business.

The Indian government is offering extensive support to SMEs. They aim to ease their path to international success through initiatives like Export Promotion Councils (EPCs) and DGFT’s schemes.

Government Schemes and Benefits

What do you get?

• Export Promotion Capital Goods (EPCG): Enables duty-free import of capital goods for export production.
• Merchandise Export from India Scheme (MEIS): Offers incentives to offset infrastructural inefficiencies.
• Market Access Initiative (MAI): Provides financial assistance for market research and trade promotion activities.
• Grants and subsidies under programs like Make in India

Private Support Services

Platforms such as Amazon Seller Central offers tools to simplify exporting.

• Need documentation assistance. Amazon’s Export Compliance Dashboard is all you would need.
• Say hi to Amazon FBA for hassle-free logistics management.

Financial Assistance

• Export Credit Guarantee Corporation (ECGC): Protects against export payment risks.
• Bank Loans: Avail pre-shipment and post-shipment financing to manage working capital.

 

No doubt, export is filled with challenges, including logistical delays, tariff barriers, and fluctuating markets. SMEs can address these by staying informed about trade regulations and leveraging the benefits offered by government policies.

Why Exporting Is Vital for SMEs

While SMEs often prioritise local markets but diversifying into international markets provides many benefits. Some of these are as follows:

• Increased Revenue Streams: Access to a broader customer base.
• Improved Brand Visibility: Boost your credibility by increasing your international presence.
• Reduced Market Dependency: Diversifying markets mitigates risks from local economic fluctuations.

Conclusion

Starting your international trade journey can be both exciting and challenging. Remaining up-to-date with compliance and regulations can help you better leverage government benefits and private support systems.

With proper planning, you can successfully establish your global footprint and take your local business to new heights.

Ship smart and stay informed.

Happy Shipping!

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