Entrepreneurs have various misconceptions about export business. They think that export is a tricky business and involved a complex process. However, entering in export business is very easy. Experience from the Director General and CEO of Federation of Indian Export Organisations (FIEO), see how a small businessman can start a successful export business. # **Steps for Starting an Export Business** For starting an export business, you need to take the following steps: ### **1. Government compliances:**  Following government compliances are required for starting an export business:  1. Establish a firm or company.  2. Open a current account of the company in a bank that deals in foreign exchange.  3. Take a Permanent Account Number (PAN) from Income Tax Department. 4. Take a GST number online. 5. Take the Importer-Exporter Code (IEC) number online from DGFT. You will get this number either on the same day or within three days. The PAN, GST, and IEC numbers are valid lifelong. ### **2. Select a product:**  After meeting the government compliances, your second step is to select a product for export.  ### **3. Check the USP of product:**  You need to make sure that the product you are exporting has some USP. Identify whether your product will be meeting the increasing demand in a foreign country or it will replace an existing product that is exported from India or any other country. ### **4. Select the target market:**  Through Internet or FIEO website, you can get the list of the countries where you have the major buyers of your product. ### **5. Identify the buyers:**  You can get the details of buyers of your product in foreign countries through different websites, Indian Embassy, etc. ### **6. Find the buyer:**  You need to select a buyer for your product. ### **7. Product sampling:**  You need to determine how your buyer will do product sampling. ### **8. Product costing:**  - While product costing, you should take into consideration the cost benefits you are getting from the different schemes of government like Duty Drawback scheme, GST refund, MEIS Scheme, etc. This will help you to keep your prices low and become competitive.  - Initially, your objective should be to generate huge volumes instead of huge profits. Once you generate huge volumes, you will automatically generate more profit. - In today’s Internet era, profit comes from volumes as buyer also knows the pricing in different parts of the world. So, the buyer is price sensitive and thus, you have to be competitive.  ### **9. Check the benefits provided by the bank:**  Government has encouraged banks to lend money to exporters.  The loan which is provided at 10% interest to SMEs will be provided at only 5% to the exporters. So, avail all the benefits provided by government to exporters. # **How to overcome the challenges faced during exports?** - If you are facing any problem in export, then you can contact different organisations like FIEO, export promotion council, and other organisations related to exports. - For example, FIEO conducts chat sessions for solving the problems of exporters. For this, you need not be a member of FIEO. - Global trade is $19 trillion and Indian economy is $3 trillion. So, entrepreneurs have lots of scope in the import-export business. It is a challenging field with huge rewards. ### **Where to find information about export products?** If you want to know which products you can export, you should check the export profile of India. Today, India exports: - Engineering products (maximum exported products) - Chemical & pharmaceutical products - Textile - Apparel - Gems and Jewelery - Electronics and biotechnologies - Different services like IT and IT-enabled services, financial services, architectural services, etc. So, you can select any of the products from the above categories to export.  ### **How to get finance for export business?** There are several schemes through which you can get finance for exports. Some of these schemes are: - Pre-shipment export credit (for raw materials or inputs) - Interest equilisation scheme by government - Post-shipment export credit  - Credit in Dollar It is difficult for new exporters to export against Letter of Credit (LC).  So, you can: 1. **Take advance payment:** You can take 30-50% advance payment from the buyer, it is beneficial for both buyer and supplier. 2. **Take** **export credit guarantee:** In export credit guarantee, you can take guarantee against the buyer from ECGC, which is a government body that covers credit default. So, if you are sending products with document against acceptance or document against payment, then you should take ECGC cover so that in case of buyer default, you will not lose your money. ### **Role of Freight Forwarding in Export Business** For a small entrepreneur, freight forwarding agency is important because he cannot do all the work involved in export process himself.  For example, if a Delhi-based exporter needs to export the products from JNPT (Jawaharlal Nehru Port, Mumbai), then he will not be able to arrange all the logistics. So, he should hire a freight forwarding agency. ### **Selection of a Freight Forwarder** Select a freight forwarder having the following characteristics: - Provide value-added services like he gets you export documents, such as Bill of Lading from the shipping company, Shipping Bill from Custom department, etc. - Should be a big freight forwarder with CHA facility so that he can help you get clearance. - Should hire a creditable freight forwarder. - Hire an agency for selecting a freight forwarder and customs clearance, if you are a small company. Once you generate huge volumes, then you can keep dedicated manpower to handle freight forwarder and customs clearance. Freight forwarding agency is the one that takes care of all the steps involved in the process of transporting goods from your shop to the buyer’s shop/warehouse in a foreign country. ### **How to save your money from getting stuck in exports?** Most of the businessmen do not get into export business because they have a fear that their money will stuck in exports.  To ensure that your money remains safe in export business, you can: - Take LC for safeguarding - Take credit cover insurance (covers 90-95% of your money) - Contact arbitration agency (if you have not taken any cover, then you can contact these agencies)  FIEO has tie-up with some arbitration agencies wherein it is decided that these agencies will negotiate with the exporter and take a particular percentage as commission if they get the money back. Thus, the exporter is satisfied that he is not having any other burden if he doesn’t get the money back. #### Summary - Start an import-export business as it has lots of growth opportunities - Keep your product costing competitive in exports business - Avail all the benefits provided by government to exporters - Contact export organisations like FIEO and export promotion councils to get help on exports - Check the export profile of India to know about Indian exports - Take export credit guarantee to safeguard your money in export business