By Prerna Mishra: Export-import (EXIM) business or international trade is considered as one of the successful commercial trends. This rewarding industry requires a thorough and better understanding of foreign market. Also, proper guidelines are indispensable to set up an import-export business. A well-organized head and a ceaseless attention towards market trend, documentation, foreign exchange aspects and a familiarity of the export policies of the government are quintessential for this business.
Last month, the multi-lateral lending agency Asian Development Bank (ADB) had sanctioned a $100-million loan to the Export-Import Bank of India (Exim Bank) to fund small and mid-sized enterprises (SMEs) operating in some of the poorer Indian states. The move will not only elevate and boost smaller firms, but will also create thousands of jobs through increased trade. Being instituted in 1981, the state-owned EXIM Bank is involved in promoting India's foreign trade and channelising funds to SMEs or SME clusters to finance goods and services to and from ADB member countries. “Providing longer-term finance to small and mid-sized exporters in Assam, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh, and Uttarakhand should increase trade by $1 billion or more over 10 years and create jobs for at least 50,000 people,” Peter Marro, Principal Financial Sector Specialist of ADB's South Asia Department has said in a release. Before stepping into the EXIM business, an individual must get a better understanding of the commodity one wants to trade.
A thorough foreign market research for the product should be conducted. A mindful and proper consideration should be given to the demand of the product in the international market. The laws and regulations pertaining to International trade and foreign business vary from country to country. So it is also important that the beginner should be fully acquainted with state, federal, and international laws before embarking on an export business.
A. Profitable reasons of exporting According to the Section 2 (e) of the India Foreign Trade Act (1992), the term export may be defined as 'an act of taking out of India any goods by land, sea or air and with proper transaction of money”. Exporting not only expands the business penetration but it also reduces the product dependence in the domestic market. Besides, it also provides innovative ideas, enhances marketing proficiency, stirs management practices and instills zeal for global competition. Forex earning - Foreign exchange (forex) earning is considered as the elementary reason for export as forex not only intensifies exporters' businesses but also improves country's economic conditions. Reliability - The companies involved in the exporting business are considered as more reliable than their peers on the grounds that the product of exporting company is capable to meet the international standards. Global trade opportunities – The exchange of ideas with global traders and a better perspective of global culture opens the door of new opportunities in the international arena. Building new customers – The visit to other countries for selling goods offers an opportunity to the exporter to woo new customers, explore world-class machines and vendors there.
B. Elementary planning Ahead of starting an EXIM business, a businessman is required to develop a proper export strategy. Initially, it is required to adopt a simple, applicable and flexible plan of action of exporting which can be easily moulded as per region-specific business sentiments.
C. International market research Market research is an integral measure to be undertaken before initiating any new business. Overall, market evaluation process is a prerequisite in the EXIM business considering different political, geographical, economic, legal and cultural factors of the foreign market apart from market characteristics factors like market size, availability of domestic manufacturers among others.
D. Registration formalities of exporters A maiden exporter is mandated to be registered with the Director General of Foreign Trade (DGFT), Ministry of Commerce, Government of India. An exporter gets a unique Importer Exporter Code Number or IEC Number by DGFT. The IEC Number is a ten digits code required for the purpose of export as well as import. In addition, the exporters are also required to get registered with Export Promotion Councils under Indian Company Act. Both Value Added Tax (VAT) and Central Sales Tax (CST) are exempted on the goods exported out of the country and in order to enjoy tax exemption benefit, an exporter is required to get registered with the Tax Authorities. Similar to export business, import business is also very lucrative business, but it also demands right strategies and a lot of ground-level preparations. The entrepreneurs looking forward for setting up an import business should proceed with a better understanding and knowledge about the international market and foreign market analysis. The import business can be exceedingly fruitful during the periods of unsteady global economy. The merchants who are smart enough to utilize such periods could enjoy a long-term success and profitability from their import business.
E. Organisations for exporters There are various organisations and agencies in India working actively to support exporters by providing information on market research in foreign trade. Export Promotion Councils (EPC) EPCs are non-profit organizations under the Indian Companies Act. Presently, there are twelve export promotion councils are under the administrative control of the Department of Commerce and nine export promotion councils related to textile sector are under the administrative control of Ministry of Textiles. Commodity Boards Commodity Boards are registered bodies under Ministry of Commerce. The boards are responsible for production, development and export of tea, coffee, rubber, spices and tobacco. Federation of Indian Export Organisations (FIEO) FIEO is an apex body of Indian export promotion organizations. It is a brainchild of Union Ministry of Commerce and the state industry department. The organization promotes the interests of the Indian exporting community in the international market. Directorate General of Foreign Trade (DGFT) DGFT is a government organisation and is responsible for the formulation of guidelines and principles for importers and exporters of country. Besides these prominent organisations, some other organisations are also providing assistance to exporters, namely Indian Institute of Foreign Trade, Indian Institution of Packaging, Export Inspection Council, Indian Council of Arbitration, India Trade Promotion Organisation, Chamber of Commerce & Industry, Federation of Indian Chamber of Commerce & Industry, Bureau of Indian Standards, Marine Products Export Development Authority, India Investment Centre, Director General of Commercial Intelligence Statistics.