India has a broad array of food items like world’s finest mangoes, staple food grains, and aromatic spices, which give the country a unique position in the food export market. Have you ever thought about the opportunities that come with promoting and selling Indian food products in the global market?
It’s a wonderful business idea that you can start. This guide will help you understand the process of starting a food export business in India.
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Realizing Your Expectations
Considering the potential India holds in exporting food along with self-sustaining food imports and exports, the government has set up a few policies to help food export businesses. India’s food export services are helped with infrastructure as well.
Subsidy provisions for the cold transport, storage, and transport schemes allow for better integration and segregation of cold transport. This helps in maintaining the quality of food that is exported out of the country. This was first laid out in the Hand-in-Hand project.
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Step 1: Product and Target Market
The first step is to identify your food export product and research what the market in the destination country needs for your export product.
Your Product: Think of a locally grown product that you know well. In India, there is a big market for mango pulp as well as for seafood and organic foods.
Identifying Your Market: Find out which countries import what you have. For example, Indian rice and spices are heavily imported by Middle Eastern countries. The US and Europe are also looking for organic foods and fruit purees. You can also check trade data to see which countries are the biggest importers of those products.
Step 2: Register Your Export Company
Now it’s time to start the formalities to legalize your business.
Company Name Registration: Choose and register your export business name, and register your export business as a Proprietorship, Partnership, or Private Limited Company.
Get a Business PAN Card: Your business also needs a PAN to comply with income tax, which will give your business a tax identification number.
Open a Business Bank Account: To complete business transactions, you will need a current account in the name of the business.
Acquiring Your Import Export Code: Possibly the most important step when obtaining an Import Export Code (IEC) is applying to the Directorate General of Foreign Trade (DGFT). Remember: it’s a 10 digit number. Also keep in mind, without an IEC you cannot legally export or import any goods.
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Step 3: Licenses Needed to Export Food
Food exportation, has it’s own unique, complicated, time-consuming, and, expensive licenses to obtain and continue to abide by. Licenses are required to show your products are safe for export.
FSSAI License: All food businesses must obtain a food license from the FSSAI (Food Safety and Standards Authority of India).
APEDA Registration: If you’re exporting agricultural or processed food products, you must obtain registration with APEDA (Agricultural and Processed Food Products Export Development Authority). APEDA helps exporters by establishing the quality specifications exporters must follow and works with exporters.
Other Boards: In some cases you would need other registration for certain specific products. For example, registration with the Spice Board is required for spices and a Tea Board license is important for tea.
International Certifications: While planning to export to premium markets, at minimum the HACCP, ISO 22000, or Organic Certifications are important.
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Step 4: Sourcing and Processing
This is the next step to prepare for the exportation of your products. You may source export products from other manufacturers or the government can assist you set-up your own processing unit.
You may claim agility FSSAI license for up to 50% subsidy towards the construction of modern food establishments, cold storage, processing facilities and other necessary items to cover your initial costs rationalizing for PMKSY and Operation Greens.
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Step 5: Identifying Customers is Crucial Beyond Borders
Finding Buyers: Buyers can be found via B2B platforms, such as Alibaba and IndiaMART, another option is to participate in international trade fairs. APEDA and the other Export Promotion Councils can also help you to find genuine buyers.
Pricing: Understanding fundamental export pricing begins with the difference between FOB and CIF pricing. Free on Board (FOB) means your quote includes the value of the goods + the cost of the goods transport to the Indian port. CIF (Cost, Insurance, and Freight) signifies that your quote includes transport and insurance to the buyer’s country as well.
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How NPCS Can Help You
Every export business, like any other business, requires a plan, which is also necessary to obtain a government-subsidised bank loan. At Niir Project Consultancy Services (NPCS) this is the service we provide.
We prepare business Detailed Project Reports (DPR), which include extensive market research, the machine we will use, the cost of the raw materials, and the financial projections. A well-supported NPCS DPR will aid you in obtaining financing and profitable construction of an export business.
FAQs
Is an IEC Needed, and What is it?
Yes, an IEC is definitely needed. An Import Export Code (IEC) is a ten-digit unique code. This code is obtained by individuals/entities planning to export/import merchandise to/from India.
How much does it cost to set up a food export business?
The least expensive option would be starting as an “export merchant,” where you source food items from other businesses. If you are looking to set up your processing factory, it will require a much bigger investment. You will also find government subsidies aimed at further lowering your initial costs.
How Do You Identify Reliable Buyers in Other Countries?
The best reliable buyers will come from government related institutions like APEDA and other Export Promotion Councils. Additionally, you can check industry specific international trade fairs, as they are one of the best ways to meet genuine buyers face-to-face.
What Is the Primary Function of APEDA?
For first time exporters, APEDA offers assistance to aid exporters in sectoral market facilitation, trading standards, quality control, and managing disputes for export and import trade. Before exporting most food products, a prospective exporter is necessary to register with APEDA.
Do You Need to Own a Factory To Export Food?
The answer is No. You can also be a “Merchant exporter.” You buy Indian food products that are ready and fully packaged, then export food products with your name, and also use your Importer Exporter Code (IEC).
