International trade is one of the foundational blocks of foreign economic policy across the world. Import and export of goods and services help countries gain access to products that may not be available easily in their own. With globalization and the advent of the internet, small export businesses have cropped up everywhere, with the common man jumping in to take advantage of free trade.
India is ranked 16th among all countries in the world for the value of its exports. In 2019, a total of USD 322.8 billion worth of goods were exported from the country, with items ranging from minerals and precious stones to computers and clothing shipped all over the world.
Given the immense potential for export opportunities, setting up a small export business can prove to be very profitable. It is possible to set up a low investment export business in India from the comfort of your home! As long as you get the legalities right, starting a small export business and obtaining an import-export loan or an instant business loan to fuel your entrepreneurial dreams has never been easier!
Here, we have put together an easy guide to begin your journey into international trade and start shipping your products right away!
How to Start a Low Investment Export Business
- Choose a Product
Before you get neck-deep into the legalities of starting an export business, you need to decide what products you want to deal in. The global market has varied demands, from Indian-produced Basmati rice and pickles to clothing and handicrafts. Spend time to understand which product your small export business could trade in. Conduct market research to gauge where the demand lies and call your shots accordingly. Here are some ideas in products you could trade in:
- Beauty products
- Leather goods
- Make a Business Plan
Once you have decided what product your business will trade in, it’s time to come up with a business plan. Pick a name for your business, determine the country or countries you want to export to, understand how you will get your products there, figure out pricing and financing details, among other things. You could also consider getting an import export loan for funding the initial stages of your business.
- Register Your Business
After the barebones of your small export business are in place, finalize the registration of your business. Registering your export business will make it easier to trade with different foreign entities. You could establish it as a sole proprietorship, partnership, LLP, private company or a public company. As a low investment export business, it would be best to pursue the sole proprietorship or partnership model.
- Get a Current Bank Account
Most businesses transact using a current bank account. While some domestic small businesses manage to trade with a savings account, an import-export business will need a current account with Foreign Exchange authorization.
- Obtain a Permanent Account Number (PAN)
Having a PAN card with the Income Tax Department in India is mandatory for all businesses. Before you start your small export business, ensure you get a business PAN card. Getting one for your business is similar to getting a personal PAN card. You can complete the entire process online.
- Get an IEC
An IEC or an Import-Export Code is a mandatory code that all import-export businesses in India have to obtain. Without this 10-digit code, you cannot export goods from the country. The Director General of Foreign Trade or DGFT issues IECs to businesses.
- Apply for an RCMC
A Registration Cum Membership Certificate (RCMC) is a way to register your business with one of many export promotion councils that exist in India. Registering with these councils will give you access to different export events and also provide opportunities to expand your business. It can help you meet suppliers, obtain trade credit or even meet new customers. Depending on the product you intend to export, you need to apply for an RCMC with the appropriate council.
- Start Exporting
Following the completion of all legalities and registrations, you can begin exporting! There are a number of marketplaces you could consider, from online portals to government-approved markets for export. It is also important to check the quality, pricing, insurance, and customs processes before you get started. You can reach out to licensed Customs House Agents to help you with the same.
Availing Financing for Your Business
Starting an import-export business will require funds, even if it is a low investment export business. Many commercial banks provide import export loans to help businesses kickstart their journey. Many suppliers and vendors also provide trade credit for businesses that cannot finance inventory outright.
Some of the common financing options available for an import export business are:
- Term Loans: A fixed-schedule loan at a predetermined interest rate can be availed to purchase equipment, inventory or fund other requirements for business.
- Working Capital Loans: A cash loan or a letter of credit from suppliers to fund short-term operational requirements of business.
- Pre-Shipment Credit: A loan sanctioned to meet any export requirements.
- Post-Shipment Credit: A financing option against an order that has already been sent. This is sanctioned usually after the shipment has been made, extended until the proceeds are realized.
- Foreign Currency Loans: This funding option can be used to avail loan in foreign currency to lower forex risk.
- Export Credit Refinancing: Some banks also refinance or replace an existing import export loan with a new one.
Loans from formal institutions will require documentation proof as well as collateral, in some cases. For businesses that do not have the requisite documents or do not want to take that route, gold loans can be a viable alternative.
Gold loans are hassle-free, have minimal documentation requirements, do not need a credit score for sanction and can be used for any purpose!
Why Rupeek gold loans are the best for your trade business
Though there are several players in the market offering gold loans it is important to choose one which suits your business needs. The time taken between applying for the loan and getting the cash in hand can be cumbersome, making you wary of taking the loan in the first place. Rupeek’s small business gold loans are ideal for entrepreneurs who need quick funding without any stress. By without stress we mean that there is no hassle of submitting bank statements, tax proof, business establishment license, trade license and other financial documents. Simply, the KYC details are enough to avail a gold loan at Rupeek.
Rupeek Gold Loans provide high loan-to-value ratios, can be availed at competitive interest rates and have flexible repayment options. In 4 simple steps, you can avail a Rupeek Gold Loan from the comfort of your home!
- Log in to our website or app and request a loan.
- Complete the KYC process.
- Have a representative evaluate the gold assets at your doorstep.
- Receive the money in your bank account instantly!
Rupeek’s gold loans are available in over 5,000 locations in India enabling you to access credit easily across the country.
Reach out to us to find out more on how to avail a gold loan to get your small export business up on its feet!