Preliminary Steps Before Exporting: Registration Formalities

Before an exporter can accept the first order and ship the first consignment, certain one-time registration formalities have to be completed. These do not have to be repeated for every shipment; they set the exporter up as a legally recognised participant in foreign trade.

Opening a bank account with an authorised dealer. Foreign trade payments must move through the banking channel. The exporter therefore opens an account — and where required a foreign-currency account — with a bank that the Reserve Bank of India has authorised to deal in foreign exchange (an AD bank). This bank later handles the letter of credit, the collection of documents, and the realisation of the export proceeds, all under the RBI/FEMA framework.

Obtaining the Import Export Code (IEC). No export (or import) can legally take place without an Import Export Code, a 10-digit number issued by the Directorate General of Foreign Trade (DGFT). The exporter applies to the DGFT for the IEC, and it must be quoted in the shipping and banking documents. It is the single most fundamental registration in foreign trade — a business simply cannot cross the customs frontier without it.

Obtaining a Registration-cum-Membership Certificate (RCMC). The Government of India promotes exports through a number of Export Promotion Councils (EPCs) and commodity boards, each looking after a particular product group (for example, textiles, engineering goods, or spices). By registering with the appropriate Export Promotion Council, the exporter obtains a Registration-cum-Membership Certificate (RCMC). This certificate makes the exporter eligible for the various export incentives, benefits and assistance that the government extends under its foreign trade policy, and gives access to the council's market information and guidance. An exporter who is not registered with the relevant council may find it difficult to claim the benefits meant for exporters. …