The Ultimate Guide to Exporting from India: Regulations, Incentives & Logistics

This briefing document synthesizes key themes, essential information, and important facts from “A Practical Guide to Exporting from India” by CA Devesh Thakur. It offers a comprehensive overview for entrepreneurs and businesses looking to engage in international trade, particularly focusing on the Indian context.

I. The Strategic Importance and Benefits of Exporting

Exporting is identified as a “fundamental driver of growth for any economy,” with profound impacts at both national and individual business levels.

A. Macroeconomic Benefits:

• Economic Growth: Exports influence a country’s GDP, exchange rates, inflation, and interest rates.
• Job Creation: A robust export sector “creates employment.”
• Foreign Currency Reserves: Boosts a nation’s foreign currency holdings, strengthening its economic position.
• Industrial Stimulation: Increased export demand can “stimulate industrial production.”
• Government Revenue: More economic activity leads to “higher tax collection.”
• Economic Recovery: Exports can “help a country emerge from recession.”

B. Benefits for Individual Businesses:

• Increased Profit Margins: “Exporting products manufactured in countries with low production costs to markets where the retail price may be higher is a way to achieve higher profit margins.”
• Reduced Production Cost per Unit (Economies of Scale): Entering new markets often requires increased production, leading to “economies of scale, generate large business volumes and reduce production costs per unit.”
• Improved Liquidity: Export payment terms frequently involve “full or partial advance payment, letter of credit or documentary collection,” which reduces risk and improves cash flow.
• Enhanced Competitiveness: International competition forces continuous adaptation and improvement of “processes, strategies, equipment, etc.,” making the exporting company “increasingly competitive.”
• Access to Less Competitive Markets: Strategic market research allows businesses to “export to countries where our products and services have less competition.”

II. Foundational Steps for Setting Up an Export Business in India

Establishing a legal entity and obtaining essential registrations are the initial critical steps for any aspiring exporter in India.

A. Establishing an Organization/Legal Entity:

Businesses must register under the “Companies Act of 2013.” Common types include:

• Private Limited Company: Requires 2-15 directors (at least one Indian resident), 2-200 shareholders, and a minimum capital of ₹1,00,000. Shares are not publicly tradable.
• Public Limited Company: Shares can be publicly traded.
• Partnership Company: Governed by the Indian Partnership Act of 1932, involving two or more individuals sharing responsibilities, profits, and losses.
• Limited Liability Partnership (LLP): Offers limited liability protection with business assets distinct from personal assets.
• One Person Company (OPC): Ideal for single-person businesses, offering liability protection.
• Sole Proprietorship: Run by a single person, owner responsible for all profits and losses, easy to set up.
• Section 8 Companies (NGOs/Non-Profit Organizations): Focused on charitable purposes, with no capital requirement.

Key documents and registrations for company formation include:

• Registrar of Companies (RoC): Registers companies and LLPs.
• Director Identification Number (DIN): Mandatory for all directors.
• Memorandum of Association (MOA): The “charter of a company,” defining its constitution, scope, and objectives.
• Articles of Association (AOA): Contains the company’s internal “rules or bye-laws and regulations that control or govern the conduct of its business.” It is “subordinate to the MOA.”

B. Essential Registrations and Accounts:

• Bank Account: A “Current Account with a Bank authorized to deal in Foreign Exchange” is essential for international transactions.
• Permanent Account Number (PAN): “Necessary for every exporter and importer,” obtained from the Income Tax Department.
• Importer-Exporter Code (IEC): A “key business identification number which is mandatory for Exports or Imports.” No import or export can occur without it. “Consequent upon introduction of GST, IEC number is the same as the PAN of the firm,” though “separately issued by DGFT.”
• Application Process: Online via DGFT website, requiring PAN, mobile/email verification, entity details, document uploads, and a fee of Rs. 500/-.
• Benefits: Opens “International Market,” increases “Revenue,” allows access to “several benefits… from DGFT, customs,” and has “No need of any renewal” as it’s valid for a lifetime.
• When Required: Customs Clearance (import/export), International Fund Transfers (sending/receiving), Food Licensing, and APEDA Licensing.

III. Indian Trade Classification (ITC-HS) and Regulations

The ITC-HS system, based on the international Harmonized System, classifies goods to define import and export policies in India.

A. Import Policy:

• Restricted: Require an import license (valid 24 months for capital goods, 18 for others).
• Canalized: Can only be imported through “specific procedures or methods of transport” and via “canalizing agencies” (e.g., petroleum products, bulk agricultural goods).
• Prohibited: “Strictly prohibited on all import channels” (e.g., wild animals, animal tallow).
• Freely Imported: Goods not in the above categories can be imported “without any restriction, if the importer has obtained a valid IEC.”

B. Export Policy:

• Restricted Goods: Require an explicit license with specified procedures/conditions.
• Prohibited Goods: “Cannot be exported at all” (e.g., wild animals, infectious animal articles).
• State Trading Enterprise (STE): Certain items can only be exported through designated STEs.
• Freely Exportable: Most items are freely exportable.

C. Registration-Cum-Membership Certificate (RCMC):

• Purpose: Validates an exporter’s registration with an authorized Indian Government agency (Export Promotional Council or Commodities Board). Necessary to avail government benefits.
• Issuing Authorities: “27 Export promotion councils and nine commodities boards in India.” For products not covered, or for multi-product exporters, the “Federation of Indian Exporters Organization (FIEO)” issues RCMCs.

D. ITC-HS Codes:

• Structure: Eight-digit codes (first 2: Chapter, first 4: Heading, first 6: Sub Heading, all 8: Regional Tariff).
• Schedules: Schedule I (Import – 22 sections, 99 chapters) and Schedule II (Export – 98 chapters).
• Governing Body: “DGFT (Directorate General of Foreign Trade)” is responsible for all changes and updates.

IV. Key Steps in the Export Process and Logistics

The export process involves meticulous planning and execution, from market selection to delivery and payment.

A. Export Process Stages:

1. Selection of Markets: Crucial research on “market size, competition, quality requirements, payment terms etc.” considering “Demand, Distance, Fright & Other Expenses, Free Trade Agreements, Accessibility.”
2. Finding Buyers: Strategies include “Participation in trade fairs, buyer seller meets, exhibitions, B2B portals, web browsing,” and multilingual websites.
3. Sampling: Providing “customized samples as per the demands of foreign buyers help in getting export orders.”
4. Pricing/Costing: Accounts for “all expenses from sampling to realization of export proceeds on the basis of terms of sale,” leveraging Incoterms and Free Trade Agreements (FTAs)/Preferential Trade Agreements (PTAs).
5. Negotiation with Buyers: Considering “reasonable allowance/discount in price.”
6. Covering Risks through ECGC: The Export Credit Guarantee Corporation Ltd (ECGC) provides policies to cover “payment risks due to buyer/ Country insolvency.”

B. INCOTERMS (International Commercial Terms):

• Definition: Universally accepted selling terms published by the ICC that “clearly state which tasks, costs and risks are associated with the buyer and the seller.”
• Crucial for: “Determining the price of the export products and negotiating the delivery point of goods.”
• Categories (Incoterms 2020):Any Mode of Transport (7 terms): EXW (Ex-Works), FCA (Free Carrier), CPT (Carriage Paid To), CIP (Carriage and Insurance Paid To), DAP (Delivered At Place), DPU (Delivered At Place Unloaded), DDP (Delivered Duty Paid).
• Sea and Inland Waterway Transport (4 terms): FAS (Free Alongside Ship), FOB (Free On Board), CFR (Cost and Freight), CIF (Cost, Insurance and Freight).

C. Processing an Export Order:

1. Confirmation of Order: Formalizing contract, examining “items, specification, payment conditions, packaging, delivery schedule.”
2. Procurement of Goods: Manufacturing or acquiring goods “strictly as per buyer’s requirement.”
3. Quality Control: Maintaining “strict quality conscious about the export goods,” including compulsory pre-shipment inspection for some products.
4. Finance: Accessing “pre-shipment and post-shipment finance from Commercial Banks at concessional interest rates.”
5. Labelling, Packaging, Packing and Marking: Preparing goods “strictly as per the buyer’s specific instructions” to ensure protection, presentation, and safety.

• Mandatory Information: Shipper’s mark, Country of origin, Weight, Number of packages, Handling marks, Cautionary markings, Port of entry, Hazardous material labels. Labels should be “in English, and words indicating country of origin should be as large and as prominent as any other English wording.”

1. Insurance: Marine insurance covers “risks of loss or damage to the goods during the while the goods are in transit.”

D. Customs Procedures and Documentation (from India):

• BIN and Current Account: Exporters need a “PAN based Business Identification Number (BIN) from the Customs prior to filing of shipping bill” and a registered current account for drawback amounts.
• Shipping Bill/Bill of Export: Mandatory customs document for export clearance. “An exporter cannot ship the goods unless and until he files the Shipping Bill as it a mandatory document.”
• EDI System: Most declarations are filed electronically through Customs Service Centres.
• Customs House Agents (CHAs): Licensed professionals who “facilitate work connected with clearance of cargo from Customs.”
• Essential Export Documents: Bill of Lading/Airway Bill, Commercial Invoice cum Packing List, Shipping Bill/Bill of Export, Proforma Invoice, Export Order/Purchase Order, Certificate of Origin (COO), Bill of Exchange (BE), Letter of Credit (L/C), Inspection/Quality Check Certificate, Phyto-sanitary certificates, and fumigation certificates (especially for agricultural commodities).

V. Types of Export Businesses and E-commerce

A. Merchant Exports/Third-Party Exports:

• Definition: A “Merchant Exporter” is a person engaged in trading who “buy[s] goods from the Indian manufacturers and export[s] them abroad” without having their own manufacturing unit.
• Contribution: Instrumental in “boosting of country’s exports, especially exports from MSME and small manufacturers.”
• Merchanting Trade Reform (FTP 2023): Encourages activities “where goods do not touch Indian border,” aiming to make “India a trade hub.”

B. E-commerce Exports:

• Definition: “Export of goods where selling is through the internet on an e-Commerce platform.”
• Documents Needed: Identity proof, Business address proof, International transaction-enabled credit card, PAN card, IEC, Product details with photographs.
• Export through Courier Service/Post: Permitted under Customs Act, 1962, with a value limit of ₹10,00,000 per consignment.
• Promotion Initiatives:Niryat Bandhu Scheme (NBS): Focuses on “capacity building and skill development” for e-commerce promotion.
• E-Commerce Export Hubs (ECEHs): Designated areas providing “favourable business infrastructure and facilities for Cross Border E-Commerce activities,” including storage, packaging, and logistics.
• Postal Route (Dak Niryat Kendras): Facilitate cross-border e-commerce, especially for artisans and MSMEs in inland regions.
• Growth Projection: Projected annual growth to “$200-300 billion by 2030 from about $5-10 billion at present.”

VI. Freight Forwarding and Cargo Logistics

Freight forwarders are crucial intermediaries managing the complexities of international shipping.

A. Stages of Freight Forwarding:

1. Export Haulage: Transport from company to freight forwarder’s warehouse.
2. Export Customs Clearance: Approval for departure from origin country.
3. Items Checkpoint (Origin Handling): Inspection, verification, and check for restricted items (e.g., flammable liquids, drugs, perishables).
4. Import Customs Clearance: Checking paperwork and legality at destination country, with potential fees.
5. Destination Arrival and Handling: Preparing product for final delivery, handling documents (invoices, Bill of Lading, packing lists, etc.).
6. Import Haulage: Final transport from import warehouse to destination.

B. Containerised and Non-Containerised Cargo:

• Containerized Cargo: Goods shipped in “reusable” standardized containers that “can withstand the challenges posed during the transit,” significantly reducing costs and aiding globalization.
• Types: Dry Cargo, Open Top, High Cube, Refrigerated (Reefer), Garments on Hanger (GOH), Open Side, Double Door, Tanker, Half Height, Ventilated, Car Carrier, Hard Top, Insulated, Tunnel, Platform, Flat Track.
• Non-Containerised Cargo (Break Bulk): “Goods shipped in pieces separately without the use of a container,” often “extremely large in sizes/dimensions” and transported in crates, bags, boxes, drums, or barrels.

C. Cold Chain Logistics:

• Purpose: Ensures integrity of “temperature-sensitive products” from origin to consumption, “reducing spoilage, retains the quality… and guarantees a cost efficient delivery.”
• Components: Cold Storages, Refrigerated Carriers, Specialized Packaging, Warehousing, and Management Information Systems (for continuous temperature monitoring and tracking).

VII. Regulatory Framework and Export Promotion Schemes

India’s export ecosystem is supported by a robust network of government agencies, policies, and incentives.

A. International Trade Regulations:

• SPS Agreement (Sanitary and Phytosanitary): WTO agreement on “food safety and animal and plant health regulations.” Standards “must be based on science” and be “non-discriminatory.” Encourages harmonization with international standards.
• TBT Agreement (Technical Barriers to Trade): Aims to ensure “technical regulations, standards, and conformity assessment procedures are non-discriminatory and do not create unnecessary obstacles to trade.” Recognizes legitimate policy objectives (e.g., health, environment).

B. Export Promotion Agencies and Councils:

• Export Promotion Councils (EPCs) and Commodity Boards: “Organisations of exporters, registered as non-profit organizations,” providing workshops, solutions, and financial guidance (27 EPCs and 9 commodity boards).
• ECGC Limited (Export Credit Guarantee Corporation of India Ltd.): “Wholly owned by Government of India,” provides “credit risk insurance and related services for exports” and credit insurance to banks.
• India Trade Promotion Organization (ITPO): “Premier trade promotion agency,” organizing “international trade fairs,” supporting SMEs, and disseminating trade information.
• Trading Corporations (MMTC, PEC, STC): Government-owned entities involved in trade, often as canalizing agencies for specific commodities (e.g., Minerals and Metals Trading Corporation (MMTC), Project and Equipment Corporation of India Ltd. (PEC)).
• Bureau of Indian Standards (BIS): “National Standard Body of India,” for “standardization, marking and quality certification of goods.”
• Export Inspection Council of India (EIC): “Official export –certification body of India which ensures quality and safety of products exported.”
• Directorate General of Commercial Intelligence and Statistics (DGCI&S): “Pioneer official organization for collection, compilation and dissemination of India’s Trade Statistics and Commercial Information.”

C. Government Initiatives and Schemes for Economic Growth:

• Special Economic Zones (SEZs) & Export Oriented Units (EOUs): Designed for “economic growth,” “promotion of exports,” “investment,” “employment,” and “infrastructure.”
• National Manufacturing Policy: Aims to “increase the share of manufacturing in GDP to 25 percent by 2025.”
• “Make in India” Policy: Launched to “facilitate investment, foster innovation, build best in class infrastructure and make India a hub for manufacturing, design and innovation.”
• Production-linked Incentive (PLI) Scheme: Announced for 14 key sectors with an outlay of Rs. 1.97 lakh crore “to enhance India’s manufacturing capabilities and Exports.”
• Ease of Doing Business: Focuses on “Simplifying, Rationalizing, Digitizing and Decriminalizing Government to Business and Citizen Interfaces.”
• National Single Window System (NSWS): Provides “end to end” facilitation and support to investors.
• PM Gati Shakti National Master Plan (NMP): GIS-based platform for “integrated planning of multimodal infrastructure, thereby reducing logistics cost.”
• National Logistics Policy (NLP): Aims to “lower the cost of logistics and lead it to par with other developed countries.”
• PM Mega Integrated Textile Region and Apparel (PM MITRA) Parks: Seven parks being set up to create world-class industrial infrastructure for the textiles sector.

D. Export Promotion Schemes (Financial Incentives):

• Remission of Duties or Taxes on Export Products Scheme (RoDTEP): “To neutralize the taxes and duties suffered on exported goods which are otherwise not credited or remitted or refunded.” WTO compliant, covering “all hidden Central, State, and Local duties/taxes/levies.”
• Duty Exemption & Remission Schemes:Advance Authorization Scheme (AA): Allows duty-free import of inputs for export production.
• Duty Free Import Authorization (DFIA) Scheme: Duty-free import of inputs with minimum 20% value addition.
• Duty Drawback of Customs: Refunds duties on duty-paid inputs used in exported products.
• Interest Equalisation Scheme (IES): Provides interest equalization (subsidy) on Pre and Post Shipment Rupee Export Credit.
• Export Promotion Capital Goods (EPCG) Scheme: Facilitates “import of capital goods for producing quality goods and services and enhance India’s manufacturing competitiveness” at zero customs duty, subject to an export obligation.
• EOU/EHTP/STP & BTP Schemes: Allow units committing to export their entire production to import/domestic procurement without duties.
• Market Access Initiative (MAI) Scheme: Financial assistance for export promotion activities.
• Status Holder Scheme: Recognizes eligible applicants with “Star Export House” status based on export performance, granting non-fiscal privileges.

VIII. Trade Statistics and Outlook

India has ambitious export targets and shows significant growth, though a rising trade deficit is also evident.

A. Key Statistics (2021-22 & Apr-Dec 2022):

• Overall Exports: US$ 676.53 billion (2021-22), growing to US$ 568.57 billion (Apr-Dec 2022).
• Exports to GDP Ratio: Increased to 21.30% in 2021-22.
• Trade Deficit: Widened to US$ 191.05 billion (Merchandise, 2021-22) and US$ 218.94 billion (Apr-Dec 2022).
• Major Export Categories: Petroleum Products, Iron & Steel, Pharmaceutical products.
• Major Import Categories: Vegetable Oils, Coal, Organic chemicals, Computer hardware.

B. Foreign Exchange Fluctuations:

• A “natural outcome of floating exchange rates,” influenced by “economic performance, the outlook for inflation, interest rate differentials, capital flows.” Exporters should “hedge their foreign currency risk via instruments such as futures, forwards and options.”

IX. Customs Declaration Forms (CN22 & CN23)

These forms are crucial for accelerating customs clearance by detailing contents, value, and origin. The sender bears liability for accuracy; “A false or misleading declaration may lead to a fine or to seizure of the item.”

• CN22: Used for items with value “more than 300 SDR.” Smaller form (74 x 105 mm).
• CN23: Required when value is “more than 300 SDR.” Larger form (210 x 148 mm), with more detailed fields.
• Common Requirements:Detailed Description of Contents: Generic descriptions like ‘clothes’ or ‘food products’ are “not acceptable.”
• Quantity and Value: Required for each article and total.
• HS Tariff Number: 6-digit number, “recommended” for commercial items.
• Country of Origin: Country where goods originated.
• Reason for Export/Category of Item: Options include “Gift,” “Sale of goods,” “Commercial sample.” “Gift” is not acceptable for commercial items.
• Total Weight and Value.
• CN23 Specifics: Includes detailed sender/importer information, commercial item specifics, fields for accompanying documents (e.g., “No(s). of certificate(s),” “No(s). of licence(s)”), and a “Comments” section for quarantine/restrictions.

X. ALL ABOUT ICEGATE

The Indian Customs EDI Gateway (ICEGATE) and DGFT portals are critical for trade facilitation.

• General Services: Jan Sunwai (grievance redressal), DGFT Helpdesk.
• IEC and Profile Management: Manage and view IEC details, verify UDIN.
• Authorizations & Licensing: Advance Authorisation/DFIA, EPCG.
• Import/Export Systems: Import/Export Management Systems, Online e-COM Applications.
• Export Incentive Schemes: MEIS (phased out), SEIS, RoSCTL, Transport & Marketing Assistance.
• Trade Disputes & Complaints: Quality Complaints & Trade Disputes.
• Deemed Export & Certification: Deemed Export Benefits, Certificate Management, Certificate of Origin.
• Regulatory & Legal Services: Policy Relaxation Committee, Enforcement Cum Adjudication.
• Payments, Refunds & Memberships: e-Miscellaneous Payments/e-Refunds, E-RCMC.
• Sector-Specific Services: Gems & Jewellery Schemes, Pre-Shipment Inspection, Interest Equalization Scheme.

XI. Key Air Freight & Shipping Terms (Glossary)

The document provides a comprehensive glossary of terms crucial for international trade, covering:

• Air Freight & Shipping Terms: Airway Bill (AWB), Authorized Dealer (AD) Code, Bank Realization Certificate (BRC), Bill of Entry (BoE), Bill of Lading (BL), Cargo, Carriage and Insurance Paid (CIP), Certificate of Inspection, Container Freight Station (CFS), Cost Insurance Freight (CIF), Custom Duty, Delivered at Place (DAP), Delivered Duty Paid (DDP), DGFT, Export, Freight, Full Container Load (FCL), ICEGATE, IEC, Import General Manifest (IGM), Incoterms, Less than Container Load (LCL), Letter of Credit (LC), Logistics, Ocean Freight, Over Dimensional Cargo (ODC), Sea Waybill, Shipper’s Letter of Instruction (SLI), Shipping.
• Shipping Documents: Bill of Lading, Sea Waybill, Airway Bill, Bill of Entry, Import General Manifest, Shipping Instructions.
• Transportation & Logistics: Cargo, Freight, Ocean Freight, Air Freight, Carrier, Vessel, Shipping Line, Shipping Agent, Shipping Schedule, Transit Time, Demurrage, Detention, Freight Forwarder, Consolidation, Deconsolidation, Containerization, Break Bulk Shipping.
• Incoterms 2020: EXW, FCA, FAS, FOB, CFR, CIF, CPT, CIP, DAP, DPU, DDP.
• Customs & Clearance: Customs Clearance, Customs Broker, Harmonized System (HS) Codes, Tariff Codes, Export Control Classification Number (ECCN).

In conclusion, India’s foreign trade environment is complex but supported by a robust framework of policies, institutions, and digital platforms. Successful exporting from India requires a thorough understanding of foundational business setups, regulatory compliance (especially IEC and ITC-HS codes), strategic market engagement, meticulous order processing, and effective leverage of government incentives and logistical support.

👉 Click here to download Export Guide E-Book by CA Devesh Thakur