How to start a business on importing raw materials?

. 6 min read
How to start a business on importing raw materials?

The import-export business allows to ship and receive the products and services. There are many import-export business ideas that you can start in India. Some of the import and export business ideas include importing online, export-import agent, consultant, dropshipping, custom warehousing, logistics expert, etc.

India has a steady supply of raw materials. Each production company requires raw material for the regular manufacturing of goods. There is a possibility the manufacturer cannot find the desired raw material in India. Therefore, importing raw materials is a convenient way to meet the requirements. Let us discuss the steps required to import raw materials in India.

How to start a business importing raw materials?

Want to know how to start import business? Refer to the steps mentioned below:

1. Obtain IEC

The first step is to get an importer exporter code. The Director-General of Foreign Trade issues a unique importer exporter code (IEC) to the people interested in starting an export-import business. It is a registration that allows traders with lifetime validity for customs, sending shipments, and monetary payments in foreign currency.

Enquiry callout with a tablet and mugs in the background

2. Trade Enquiry

The next step in importing the raw material is trade enquiry. Every purchase starts with a trade enquiry, so, it is essential to know the requirements of an enquiry. Once you know the requirements, deciding on the raw materials that you want to import will be easy. You can use the internet to search for the importers and countries you want to import from. After identifying the seller, you can enquire and ask for a quotation of your import.

3. Import license

An import license is essential for the importing process. However, not all imports require a license. You can check the identification of the products from Indian Trading Clarification based on ITC classification. ITC contains the list of all the items of trade and import-export operations. If your item is listed, you are required to have an import license.

An import license can be general or specific. A general license allows you to import products from all the countries, and a specific license authorises import from specific countries listed in the license. The documents required for obtaining an import license are listed as follows:

  • Receipt of the payment of products
  • Certificate from a CA stating the values of goods
  • Verification certificate for Income Tax Department.

4. Obtain foreign exchange

Foreign exchange is essential for placing an order. You can apply for foreign exchange to the Exchange Control Department of RBI. The application will be forwarded to the bank by the importer. After verification, the foreign exchange for the particular transaction will be sanctioned. However, it will only happen if the application is found valid. In case of an invalid application, the transaction will be cancelled.

5. Place an order

After obtaining foreign exchange, the importer can place an order, either directly or through an agent. An importer cannot import canalised items directly. Permission is required from the canalising agency for imports. After placing the order, the agencies or companies will supply the goods and commodities.

6. Letter of Credit

LoC is a letter issued by the domestic bank to an international bank where the importer has ordered goods from. If you have trust in the exporter, you can make the payment in advance or vice versa. If the exporter knows you or has trust in you, he can send the consignment in advance.

However, there is an alternative method when both parties don't know each other and are doing business for the first time. In that case, LOC (letter of credit) is used. You can approach the bank with a copy of the order and request the products. After verification, the bank will offer the facilities to the importer.

7. Clearing of goods and arranging the finances

The exporter will complete the shipment as laid down in the letter of credit. After that, you will have to do the same. You will have to arrange the finance and clear the documents as per the contract. You will need to file a bill of entry and other documents to complete the customs clearing formalities.

8. Arrival of goods

After you determine the import duty rates for clearance of goods, you will receive your package of goods. You can proceed with the payments and collect the shipment from the warehouse. The import duties in India depend on the type of goods and commodities. You can receive the goods after the payment of import duties. You can now use the raw material for the manufacturing of your products.

Documents required for importing raw material in India:

The documents required for importing raw material in India are listed as follows:

  • IEC Registration
  • LOC (Letter of Credit)
  • Industrial License
  • Bill of Lading
  • Import License
  • Insurance Certificate
  • Test Reports
  • Central Excise Documents
  • GATT / DGFT Declaration
  • Commercial Invoice
  • Registration Cum Membership Certificate
  • Bill of Entry
Red coloured import container and blue coloured export container

How to start export-import business?

The answer to the question “how to start export and import business" requires several steps, and the steps are listed as follows:

  • Import-export business plan
  • Select a product for import-export business
  • Identify the target audience or target market
  • Identify and source the suppliers you need for your business
  • Price the products
  • Find the distributors a client that will help you deliver your products to the target audience
  • Transport the products to the distributors and clients
  • Offer great customer service globally


Import and export business is a complex business. It includes various multi-layered and time-consuming steps, like licensing, registration, LOC, IEC, enquiry, registrations, permits, warehousing, etc. However, it is considered a profitable business. If you are looking to start an import business, you can refer to the steps mentioned in the article for importing raw material in India. It will help you streamline the functions of an import-export business.

Also Read:

1) How to start an export business in Kerala?
2) How to Start a Home Textile Business?
3) How to Start A Small-Scale Essential Oil Extraction Business?
4) How to get started with the food processing business?

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Q. What are the best export and import business ideas to start in India?

Ans. There are various export and import business ideas that you can start in India. Some of the import business ideas include online importing, online exporting, custom warehousing, investing in export-import ventures, custom agent, dropshipping business, freight forwarding business, handicraft export business, transportation business, etc.

Q. Is an import/export business profitable?

Ans. The majority of import/export businesses are profitable. It is essential to conduct research on the industry and have a business plan, to enhance the profits. If you understand your business inside out, the chances of success are higher. To increase the profits and revenue of your business, you can advertise your business online or using social media platforms.

Q. How much capital is required to start an import-export business in India?

Ans. The capital and investment to start an import-export business are dependent on the goods and location of the business. However, the average cost of an import-export business ranges between INR 65,000 to INR 80,000. The business costs might go up to INR 1 lakh. It is one of the most affordable and low-investment businesses to start in India.