How to start an import-export trading company in India: registrations and licences

Choosing a structure

Trading businesses carry inventory, credit and foreign exchange risk, so many traders choose a private limited company or LLP. Banks extending packing credit and import financing look at the entity's accounts and net worth. A proprietorship can obtain an IEC too, and many small exporters start that way.

If foreign partners will invest, a company is the usual vehicle; foreign investment in trading has specific FDI conditions depending on whether it is wholesale, single-brand retail or e-commerce, so take advice before accepting foreign capital.

Registrations for importers and exporters

The IEC is the gateway registration, but customs, GST and product regulators each add their own requirements. The table lists the common ones for a general trading company dealing in consumer and industrial goods.

Keeping the IEC active

Every IEC holder must update the IEC on the DGFT portal between 1 April and 30 June each year, even if nothing has changed. If you miss it, the IEC can be deactivated, which blocks shipping bills and bills of entry until you complete the update. There is no fee for the annual update.

Update the IEC on the portal whenever company details, directors, address or bank accounts change, since customs and DGFT systems pull data from it and mismatches can hold up clearance or refunds.

GST and customs on imports and exports

Imports attract basic customs duty and IGST, among other levies, based on the tariff classification. IGST paid at customs can be claimed as input tax credit by a registered importer. Some goods are restricted or prohibited and need a DGFT licence, and many consumer products now need BIS certification under quality control orders before customs will clear them.

Exports are zero-rated. File an LUT before the first export of the financial year and ship without IGST, then claim refunds of unutilised credit; or pay IGST and claim refund on it. Keep shipping bills, export invoices and bank realisation records for every shipment.

Ongoing compliance

Realise export proceeds within the period set by RBI and track each shipment against bank realisation. Importers must pay suppliers through authorised banks and file documents for evidence of import where applicable.

Brand owners and importers placing plastic-packaged goods on the Indian market generally need EPR registration with the pollution control boards. File GST returns, reconcile IGST credits from customs and keep the IEC and RCMC current.

Pitfalls for new traders

A good customs broker and a clear product classification at the start prevent most problems. Keep classification decisions documented in case customs questions them years later.

• Missing the IEC annual update and finding shipments stuck at port.
• Importing consumer goods that need BIS certification without it.
• Exporting without an LUT and paying IGST unnecessarily.
• Wrong tariff classification leading to duty demands later.

Step by step

1. 1Set up the entity and bank account

   Open a current account with a bank that handles trade finance.

2. 2Apply for IEC

   Apply online on the DGFT portal using PAN and bank details.

3. 3Register for GST and file LUT

   Register and file the LUT before exporting.

4. 4Register with customs

   Register the AD code at ports and set up ICEGATE access.

5. 5Obtain product approvals

   FSSAI, BIS, CDSCO or quarantine approvals for regulated goods.

6. 6Join an export promotion council

   Obtain RCMC to claim export benefits.

7. 7Calendar the IEC update

   Update between 1 April and 30 June every year.