How To Start Trading Business In India?
Online shopping is becoming more popular, leading to a rise in online businesses. Creating an online store offers vast opportunities. Nowadays, company registration can be done digitally from home or the office. India is experiencing an increase in the import of products from various countries, both online and in physical stores. Additionally, a wide array of locally made products in India are ready for export. The import-export business is profitable, so why not learn how to start a trading company in India as a first step?
Register Your Company First
Starting a trading company in India doesn’t have shortcuts, but the government has simplified the registration process for new entrepreneurs. The journey begins by registering the trading company, which is similar to any other company. You’ll need to select a company name, check its availability, and decide on the company structure—options include sole proprietorship, partnership, private limited company, or LLP. Once the application gets approval, the Registrar of Companies (RoC) will assign a Corporate Identity Number (CIN) to the company.
Getting To Import Export
The company must do the following to ensure smooth operations when conducting an import or export business.
Registering with DGFT for Import-Export Code (IEC):
Begin by registering with the Director-General of Foreign Trade (DGFT) to obtain an Import-Export Code (IEC). This unique ten-digit code is crucial for all import and export transactions.
To apply for the IEC, submit an ANF2A form along with the necessary documents:
- Two passport-size photographs of the applicant.
- PAN (Permanent Account Number) details.
- Valid mobile number and email ID for communication.
- Current bank account number details.
- The banker’s certificate confirms the existence of the bank account.
Application for Import License:
- Acquiring an import license ensures authorization for importing goods into India.
- Without this license, imported goods may be declared unauthorized, confiscated, or refused entry.
- These licenses have a validity period of approximately two years for capital goods and 18 months for raw materials, components, and consumables.
- The licenses are renewable, allowing businesses to continue their import activities lawfully.
Securing the Import-Export Code (IEC) from DGFT and the necessary import license is crucial for smooth and legal import operations into India, ensuring compliance with regulations and authorization for importing specific goods.
Acquire A Registration
To acquire a Registration Cum Membership Certificate (RCMC), companies engaging in import or export activities must register with an Export Promotion Council (EPC). This certificate is essential for seeking import/export authorizations and enjoying trade benefits. India has fourteen Export Promotion Councils across different sectors. Registering with these EPCs can aid in securing essential benefits for export activities.
To apply for RCMC, companies must submit a certified copy of the Import-Export Code (IEC) number and a membership fee per the EPC’s requirements. Obtaining RCMC through registration with the appropriate EPC is crucial for companies involved in international trade to access trade benefits and necessary authorizations for imports or exports.
Apply For An Export License
Applying for an export license is necessary to export goods or services. Importers can also venture into exporting if they choose to do so. Both import and export activities are feasible, contingent upon the products or services falling within the Indian Trading Code classified by the Harmonised System of Coding (ITC-HS).
The ITC-HS code is an eight-digit alphanumeric code that categorizes goods for trade purposes. Only the Director-General of Foreign Trade (DGFT) issues this code to exporters, categorizing the goods for international trade. Obtaining the ITC-HS code from the DGFT is essential for exporters to ensure proper classification and compliance while engaging in export activities based on the nature of the goods or services being traded.
1. Taxation Benefits
Taxation is a significant concern in import-export businesses. Properly registered trading companies can benefit from tax exemptions under the integrated goods and services tax (IGST). Additionally, they can access advantages linked to regional Goods and Services Tax (GST) and the Export-Import Credit Guarantee Corporation.
These benefits play a crucial role in the functioning of a trading company in India. If you encounter hurdles during the registration process of your trading company, we’re here to assist and guide you through the process.