Exporting to India – everything you need to know

Doing business in India isn’t easy, and it takes a lot of patience and a solid, long-term strategy to crack markets that vary considerably across a vast country of 29 different states and seven union territories.

But if you’ve the time, patience, and means to tackle it, you’ll be opening your business up to one of the world’s fastest-growing economies, and a goods and services export market worth around £8.5 billion.

Here’s everything you need to know about exporting to India…

What are the pros and cons of exporting to India?

India is a massive country with a population of around 1.25 billion people, and is a melting pot of cultures and religions, with six main ethnic groups, seven major religions and many more minor ones, so if you’re visiting on business, make sure it doesn’t clash with a holiday period.

So, why do business with India? The strengths of the Indian market include:

  • fast growing economy with one of the world’s largest youth populations
  • expanding emerging cities with more than 50 cities now over a million people
  • availability of skilled, low cost workforce
  • good network of banks, financial institutions and an organised capital market

And the benefits to UK businesses include:

  • English widely spoken
  • common legal and administrative history
  • rising personal incomes creating a new middle class consumer market
  • gateway to south east Asian markets

One of the main problems with the Indian market is that consumers often prefer low prices to quality and durability, so you may find it hard to get a foothold in the market, despite offering a superior standard product or service.

Other challenges include:

  • barriers to trade and investment in some sectors resulting from regulatory constraints, local sourcing requirements and import tariffs
  • protecting your Intellectual Property (IP)
  • risk of bureaucratic delays
  • land acquisition can be difficult
  • risk of bribery and corruption
  • access to the right skills in the local workforce
  • poor infrastructure, including distribution and logistics as much of India remains rural
  • weather extremes with extremely hot weather in summer and wet weather in the monsoon season can affect business

If you’re in any of the following industries, you should find your goods and services are in demand in India:

  • mineral fuels and oils
  • gems and precious metals
  • electrical machinery and equipment and parts
  • machinery, mechanical appliances, reactors and boilers
  • organic chemicals
  • iron and steel
  • plastics
  • animal or vegetable fats and oils
  • fertilisers
  • medical, optical, photographic, measuring, precision, medical or surgical equipment
If you’re doing business in India, you’ll need a reliable and cost-effective teleconference provider to help keep in touch when travelling isn’t an option. Here’s How to set up a conference call between the UK and India.

And remember, you can now screen share and video conference, using Crankwheel.

How does tax work in India?

A double taxation agreement exists between the UK and India, so tax isn’t paid twice – once in each country – on exported goods and services.

The main tax rates include:

  • Corporate Tax – set at a rate of 25% for domestic businesses. Corporate tax on a UK company in India will depend upon the taxation agreement between the governments of India and the UK.
  • Income tax – ranges from 0% to 30%, depending upon income.
  • Capital Gains Tax – set at a rate of 20% with indexation, and 10%without indexation.
  • Valued Added Tax (VAT) – charged between 0% and 28%.

If your business is VAT registered, you can zero-rate the VAT on most goods you export to India, provided you submit evidence of the export within three months of the sale.

How will I be affected by customs in India?

When exporting to India, you need to make export declarations to HMRC through the National Export System (NES), here’s how to declare your exports through the NES to India.

You’ll also need to classify your goods as part of the declaration, including a commodity code and a Customs Procedure Code (CPC). You can find commodity codes and other measures applying to exports in the UK Trade Tariff.

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