Sample Copy. Not For Distribution. · & import. I hope this book will help the readers to...
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CA Shiva Chaudhari
2
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PRACTICAL GUIDE
HOW TO START
EXPORT-IMPORT
BUSINESS
(Unlock your future)
CA Shiva Chaudhari
(B.Com, FCA, CS, MBA, DIBF, FAFE)
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Dedicated to
This book is dedicated to my beloved parent
Shri Masharubhai Chaudhari
and
Smt Shantaben Chaudhari
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INDEX
Sr Chapter Page
1 Introduction 1
2 Starting Export Import Business
1.1 Business Idea
1.2 Choosing Business Structure
1.3 Naming your business
1.4 Location of your business
1.5 General Registration & Licence
required
11
11
15
19
22
25
PART-A EXPORT
3 Choosing Products to Export 28
4 Registrations& Licences 31
5 How to Get Export Orders? 42
6 Export Contract 45
7 Export Procedure 51
8 Packing & Labelling of Goods 56
9 Custom Clearance & Documentation 62
10 Receipt of Export Proceeds 78
11 Duty Drawback & Incentives 93
12 Risk in Export and its Mitigation Process 99
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PART-B IMPORT
13 Choosing Products to Import 107
14 Registration, Licence & Legal Provisions 110
15 How to Choose a Supplier for your products? 121
16 Import Contract 125
17 Import Procedure 129
18 Payment Methods & Procedure 147
19 Risk in Import and its Mitigation Process
155
PART-C LEGAL & DOCUMENTATION
20 Related Provisions of Integrated Goods and
Services Tax Act, 2017
161
21 Applicable provisions of Foreign Exchange
Management Act, 1999
172
22 Managing General Risks in Business 191
23 Import from China 200
24 How to Solve Trade Dispute in Export & Import? 204
25 Registration of a Trademark for your Product 212
26 How to Draft a Contract? 219
27 Specimen
I. Export-Import Contract
II. Agreement Not to Deal without Consent
225
234
28 Role & Responsibilities of various Agencies
i. Shipping Line
ii. Freight Forwarder/Custom House Agent
244
245
249
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iii. Custom Freight Station
iv. Surveyor
256
258
29 Glossary of Terms & Important Websites 261
30 Summary 283
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HOW TO START EXPORT-IMPORT BUSINESS (Unlock your future)
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1. Introduction
The world is getting closer in terms of cross border trade and
investment, by distance, time zones, languages, government
regulation, culture and business. The world is not perfect. It is
characterized by considerable amount of uncertainty regarding the
demand, market price, quality and availability of own products and
those of suppliers. There are transaction costs for purchasing or
selling goods. Each country is gifted with specific natural
resources. Each country has limited resources and scarcity of some
goods. Some goods are available at relatively less price in another
country compare to home country. Due to difference in cost,
technology and expertise, one country purchases something from
another and sells something to other countries. Due to such
differences, international trade came into existence.
International trade has flourished over the years due to the many
benefits it has offered to different countries across the globe.
International trade enhances the domestic competitiveness and
takes advantage of international trade technology. The
international trade accounts for a good part of a country‘s gross
domestic product. It is also one of important sources of revenue for
a developing country.
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In India, cumulative value of exports for the period April-March
2016-17 was US$ 274645.10 million (Rs. 1841314.39 crore) as
against US$ 262290.11 million (Rs. 1716377.99 crore) registering
a positive growth of 4.71 per cent in Dollar terms and positive
growth of 7.28 per cent in Rupee terms over the same period last
year. Cumulative value of imports for the period April-March
2016-17 was US$ 380367.65 million (Rs. 2550926.19 crore) as
against US$ 381006.64 million (Rs. 2490298.03 crore) registering
a negative growth of 0.17 per cent in Dollar terms and positive
growth of 2.43 per cent in Rupee terms over the same period last
year.
Due to advanced production techniques, highly advanced
transportation systems, transnational corporations, outsourcing of
manufacturing and services, and rapid industrialization, the
international trade system is growing and spreading very fast.
Cross border transactions created many opportunities for exporters
and importers across the globe to import products having less
production cost in exporting country and thereby taking advantage
of margins in selling in domestic market. This book is written in
simple language, covering step by step practical aspects of export
& import. I hope this book will help the readers to understand the
export import procedures and laws easily. If you have any query or
doubt relating to export or import, you can email me on
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HOW TO START EXPORT-IMPORT BUSINESS (Unlock your future)
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2. Starting Export &
Import Business
Entrepreneurship is a journey that requires a lot of time, planning,
effort and hard work. There is no short cut to make business
success overnight. Many people start business with good amount
of money but end up failing and they leave the business. If you can
make your business survives, the rewards of entrepreneurship are
well worth the obstacles you'll face during initial phase.
Starting an import export business needs a proper understanding of
the foreign market, domestic as well as overseas regulations. Let us
discuss step-by-step overview of what you need to do to start a
well planned export import firm.
2.1 Business Idea
Coming up with a business idea is the first step in starting a
business. A business idea is a concept which is used for
financial gain usually centered on a product or service that can
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be offered against money. An idea is the ground structure of
the building when it comes to the business as a whole.
Business ideas can be classified into:
(1) Traditional: These are traditional in nature and selected
based on any existing business trend or market.
(2) Unique: These are unique ideas having Innovative,
Unique, Problem solving and Profitable nature.
Once you have business idea, the first step is to taste this idea
whether it is worth after considering the related factors as
under.
Taste the Business Idea
1. Expand your business idea
Expand your business idea into sub-steps to analysis from
different perspectives. E.g. if you have an idea of exporting
something, then expand it into further sub-steps like what
products, where, when and why? Every business will rely on
something that will sell to customers. The next thing that you
must to do is to clearly and accurately define those products as
result from the initial idea. You should ask yourself following
questions:
1) What product you will offer?
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2) What are the features of these products?
3) What are the benefits that your products will bring to
your potential customers?
4) What types of additional benefits will be offered by
that product?
5) How your product is different from other competitors
like it may be different in terms of quality, packing, its
duration or price.
2. Define the Market for your Product
You have an idea and defined products that will be offered to
the market. The next thing that you must to do is clearly,
precisely, and unambiguous define the market that will be
served with these products. Here are some questions that you
as an entrepreneur will need to answer:
1) On which market you will offer these products (region,
country, and continent)?
2) Who will be the customer for these products?
3) What are the characteristics of those customers who
will consume your products (manufacturers, dealers,
retailers etc)?
Your answers to the above questions should be based on
practical trade.
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3. Analysis the Market Competitors
Analysis of your competitors will give edge to launch your
business idea successfully. Always keep in mind that your
competitors have same capability to offer the products and
attract the buyers. It is necessary to define the main
competitors who are already in the market. It is advisable that
you should study the business policy and products offerings
by your competitors. To start with, focus only on medium to
large players.
1) Who are the major market players in the industry in
which your business idea is categorized?
2) What, where, and how those major market players
offer their products?
3) What are the main features & business policy of their
trade?
4) What is the resistance for entry into the market related
to your product?
5) How your product will prevail more than your
competitors in terms of price, quality, packing,
delivery and customer satisfaction?
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Once you have decided what to export or import, where to export
or from where to import and how competitively from other market
players, your next step is to decide the business structure.
2.2 Choosing Business Structure
Before choosing the business structure, let‘s understand the
type of exporters. This will also help you in deciding the right
business structure.
Generally there are two main categories of exporters. There is
no such category for import.
An exporter can act as either a merchant exporter or a
manufacturer exporter.
1) Merchant Exporter: Refers to the exporter who buys the
goods from the manufacturer and then sells them to foreign
customers. This is one type of trading activities and works
on similar concept of general provision stores where you
buy goods directly from manufacturers or dealers and sell
to end consumers. In case of merchant exporter
organisation structure can be either Proprietorship or
Registered partnership firm or LLP. Proprietorship is not
suggested keeping in mind the legal responsibilities of the
owner.
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