How to Start an Export Business in India: 6-Step Checklist

How to start an export business in India: what you need first

Exporting is not just about finding a buyer abroad. Your goods have to leave India with the right registrations, the payment has to come back through proper banking channels, and your tax position has to be clear. If any of these is weak, the shipment can get stuck at the port, or your refund can get stuck later.

The six steps below are in a sensible order. Do them before you commit to a delivery date with your buyer, not after.

• Import Export Code (IEC)
• Current account with a bank that handles foreign remittances
• GST registration and a decision on how you will export
• Product approvals and licences, if your product needs them
• A written proforma invoice or contract
• One folder for invoices, shipping papers and bank payment proofs

Step 1: Import Export Code (IEC) from DGFT

For most goods trade, you need an Import Export Code. It is issued by the Directorate General of Foreign Trade (DGFT) and is linked to your PAN. Customs, banks and shipping lines will ask for it, so you cannot really move forward without it.

Apply in the name of the correct legal entity, whether that is a proprietorship, partnership, LLP or company. The PAN of that entity must match the name on your bank account and GST registration. A mismatch in names or details is one of the most common reasons for delays.

Some services exports follow different rules, so if you plan to export services or software rather than goods, check your position separately.

Step 2: Open a current account that can handle foreign remittances

Your export payments should come into a current account held in your business name. Not every branch is comfortable with foreign payments, so ask your bank before you open the account whether it handles foreign remittances and export documentation.

Why does this matter? Your bank will record the incoming foreign payment against your shipment. Later, you may need bank proof of that payment for GST refund, for customs or export-benefit claims, and for your own accounts. Receiving money in a personal account or a third party's account can create avoidable problems.

Step 3: GST registration, LUT or IGST refund: which route to choose?

Exporters should generally be registered under GST. Once registered, you must decide how you will export. Exports are treated as zero-rated supplies, which means you do not ultimately bear GST on them. There are two ways to get there.

Route one is exporting under a Letter of Undertaking (LUT). In simple words, you give the department an undertaking that you will complete the export, and in return you ship without paying IGST. Route two is paying IGST on the export invoice and then claiming a refund of that IGST.

Which is better depends on your cash flow, your input tax credit position and how comfortable you are with the refund process. Paying IGST blocks your money until the refund comes. Using LUT keeps cash free, but the undertaking has conditions and must be filed and renewed as the law requires.

• LUT route: no IGST paid at the time of export, so working capital stays free
• IGST route: tax is paid first, then refunded after you file the claim and the records match
• Whichever route you choose, your shipping documents, invoices and bank receipts must match each other

Step 4: Check product approvals before you ship

Some products need extra licences or registrations, either in India or in the country you export to. Food products, for example, may need an FSSAI licence or registration. Other goods may need quality, plant, animal, drug or similar approvals, and a few items are restricted or prohibited for export.

Do not assume that because you can sell a product locally, you can export it freely. Your buyer's country may also have import rules, labelling norms and testing requirements. Ask your buyer for their import requirements in writing and match them with the Indian side before you start production.

Steps 5 and 6: Written contract and one clean document folder

Never run a first export order on a phone call or chat message alone. Get a written proforma invoice or contract that clearly states the price, currency, payment terms and delivery terms. It should also name the buyer properly and describe the goods in the same way you will describe them in your shipping papers.

This protects you if the buyer delays payment or disputes the goods. It also makes your bank and customs paperwork smoother.

Then keep one folder, digital and physical, for every shipment. Refunds and later queries from the department or the bank depend on it.

• Proforma invoice and final commercial invoice
• Packing list and shipping documents
• Customs and shipping bill records
• Bank payment proofs and remittance advices
• LUT copy or IGST payment proof, as applicable
• Correspondence with the buyer about price and terms

Common mistakes first-time exporters make

Most delays come from small mismatches, not big legal problems. Names that differ between the IEC, bank account and GST registration cause trouble. So does a shipment started before the product licence is in place, or a buyer payment received through an unclear route.

Another common mistake is leaving the paperwork until later. When a refund is delayed or a notice comes months afterwards, a missing invoice or bank proof is hard to replace. Build the habit of filing documents from the first order.

If you are unsure about the right GST route, your product licence or your contract terms, get advice before the shipment, not after. Fixing a problem after goods have left India is usually slower and costlier. CGA's tax and legal team can help you set up your export process, from registrations to contract review and GST compliance, based on the facts of your business.

Frequently asked questions