India
Exporting to India
India is a major, and growing, export market and offers great possibilities for UK businesses looking for a new export market. Trade between Europe and India has increased rapidly in recent years. The UK is India's second largest trading partner after the US, and the Indian market is the UK's biggest export market among developing countries.
This guide highlights some of the key features of the Indian market, and explains how you can start to win export business there. It also identifies sources of support to help you.
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Assess The Opportunity To Trade With India
With a population of over one billion people, and a rapidly developing economy, India is a huge potential market. There are many opportunities to export to Indian companies. As well as machinery, local companies look for products and services that they can use to increase the sophistication of their products.
While many Indian businesses remain small, there are a number of large, world-class companies. Key sectors include IT, healthcare, pharmaceuticals and support services such as call centres. In the future, continuing trade liberalisation and economic reforms are expected. This should ensure that India remains an attractive export market over coming years.
Regional Focus
Within India, there are significant local differences in wealth and commercial activity. Agricultural areas tend to be relatively poor. Large, international businesses are concentrated in major cities. These commercial centres are the primary targets for exports.
Understanding Indian Customers
India is ethnically diverse, with a whole range of different languages and religions. Although Hindi is the official national language, less than half the population speak it. English is the key language for commerce. Most business people you deal with, when exporting, are likely to speak good English.
Indian business culture tends to be polite and somewhat formal - for example, exchanging business cards, and using titles and surnames rather than first names. It's normal practice to start meetings with small talk rather than getting straight down to business. At the same time, India is very culturally diverse, with a whole range of different customs and religions. A good rule of thumb in meetings is to follow your host's lead.
Building Relationships
Indian businesses are organised in a similar way to the UK, but decision-making power tends to be concentrated at the top. A personal introduction to a top-level individual can be very helpful. See the business link guide to entering overseas markets.
Winning new business can take longer than you would like. You should be prepared to invest time and effort in building a long-term relationship.
Trade Visits To India
Successfully exporting to Indian customers depends on building relationships, and often requires several face-to-face meetings. Trade visits can help you identify potential customers and key contacts, and find out what they think of your product. You can also use them to build relationships with local advisers and other key contacts.
Find out about trade visits and business opportunities on the events section of the website.
To make the most of trade visits, plan well in advance. Make sure you have a clear objective and organise all the support material you need. Try to make appointments with target contacts in advance, and reconfirm them shortly before you travel. Make sure you're speaking to people who make exporting decisions. If you have local agents, use their expertise. In an organised trade visit, the organisers should help you find contacts.
To make the most of trade visits, plan well in advance. Make sure you have a clear objective and organise all the support material you need. Try to make appointments with target contacts in advance, and reconfirm them shortly before you travel. Make sure you're speaking to people who make exporting decisions. If you have local agents, use their expertise. In an organised trade visit, the organisers should help you find contacts.
Marketing And Selling In India
To succeed in the Indian market, you need to compete with local, national and multinational businesses. As an exporter based in the UK, your costs are likely to be higher than those of many competitors. You therefore need to clearly demonstrate the value of what you offer. Superior technology and quality may give you an edge.
There are several ways to reach customers:
- Exporting directly can suit high value products or services. However winning new customers is likely to require significant investment in building relationships, and several visits.
- You may find it more cost-effective to work with a local agent or distributor.
- A joint venture with a local partner can be a way of accessing the Indian market, particularly in highly regulated sectors.
- Larger businesses, and increasing numbers of middle-market consumers, have Internet access.
You must be prepared to adapt your offering to suit the Indian market. Any advertising or other promotion should be adapted to suit Indian culture. You also need to take into account local product regulations.
Financing Exports To India
Indian companies purchasing imports generally need approval. If you are selling to an experienced importer, they should be able to advise you of the documentation they require.
Imports are generally financed using import letters of credit or import bills. These are promises from your customer's bank to make payment to you once the goods or services you export are received and the documentation covering the transaction is properly and correctly presented.
The local currency, the rupee, is not convertible outside of India. Many Indian purchases from overseas are made in US dollars, though your customers may be prepared to deal in sterling. Offering to deal in US dollars may suit your customers, but puts you at risk if the dollar/sterling exchange rate changes.
Taxes, Duty And Legal Considerations For Exports To India
In the UK, you must declare all exports to HM Revenue & Customs (HMRC). You also need to keep documentary evidence of exports, and record the value of exports on your VAT return. Exports of most products to India are zero-rated for VAT. There are no additional export taxes.
Most goods can be freely exported to India, though there are restrictions in areas such as goods with potential military use.
Indian Taxes And Regulations
There are some restrictions on imports - often to protect local businesses in particular sectors. Imports must comply with local regulations.
Imports are subject to Indian customs duty. Customs duty can be made up of several elements, and the level of duty depends on the specific product. Typically duty totals up to 25 per cent, though rates can be higher on certain products.
In general, it is your customer who will be liable for import duty and any additional taxes. If you have a local presence in India, such as an office, the tax position can be much more complex.
Duty
When you export goods to India, they will attract import duty. You or your local representative will have to pay this before the goods will be released by customs. The level of duty will depend on the type of product.
To find out the duties paid on goods exported to India, you will need a 4 or 6 figure HS or Commodity Code number for your product, obtainable from the HM Revenue & Customs Tariff Classification Service Enquiry Line on Tel 01702 366 077.
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