Most Startup in India doesn’t experience a smooth journey while establishing a business for international trading. There are countless requirements one has to fulfill before getting engaged with such a business. IEC for Startup is the basic requirement for starting the export business in India which also lures a lot of benefits o its holders.
IEC is one such requirement that is mandatory for the individual who has dreamt of establishing a successful exporting business in India. It has been noticed that there is a lot of confusion among the startups regarding the import-export code and its benefits. In this blog, we would be unfolding some crucial facts regarding the same and explains why the IEC for Startup is so important.
Why Exporter Requires the IEC Registration?
Given the existing export-import policy, no entities could enter into the business of global trading unless they possess an IEC number. The IEC number act as a green card for startups and business willing to enter into exporting business. IEC number is required to be mentioned in the shipping bill while exporting goods outside India. It is important to note down that the IEC is issued by the Directorate General of Foreign Trade (DGFT[1]) Organization.
Does IEC number for Startup Serves any Benefits to its Holders?
Following are the prominent benefits that Startups can avail by obtaining the IEC.
Access to Global Market
With IEC number at your disposal, Startup has the liberty to expand their business in the overseas market. It does not only help them to scale up their business but also let them make a considerable profit. International markets aren’t hard to target if Startup have the right license and registration at the back up. IEC for Startup allows the access to global market.
Lifetime Validity
Starts up are always more concerned about the validity of the government license since the majority of them seek periodic renewals. However, that’s not the case with IEC registration as it offers lifetime validity to its users. That means you don’t have to renew it again and again on a reoccurring basis once you obtained it from the authority.
No Maintenance Charges
Once you successfully availed the IEC from the relevant authority, you don’t have to worry about entertaining additional charges for its maintenance. Moreover, it also must be noted that IEC registration is free from any applicable hidden charges. The only cost you need to address is when you applied for this code. IEC for Startup doesn’t imposed any requirement for additional or maintenance fees.
Mitigates the Risk of Fraudulent Transportation
The majority of Startups inherently approached cautiously when it comes to addressing legal and financial obligations even if it is related to logistical supports. Even with tighter legal compliances, international trading faces the constant threat of illegal transportation that further translated into a loss of revenues for the companies.
However, the companies who execute their trade with IEC are more likely to mitigate this threat up front. Therefore, obtaining IEC is a good idea for startups who were scared to enter the global market due to this reason.
Access to Export Incentive
Not all Startups are financially blessed and often run into a scarcity of funds while executing their global trading. Fortunately, government and authorities are aware of this fact and have launched various growth-oriented schemes that work for the betterment of the exporter and importers.
Export Incentive comes under the government-oriented schemes that offer regulatory, legal, and monetary benefit to the IEC holders to accelerate the export rate in the country. Even if you are an owner of a newly launched company that holds IEC registration, you are eligible to avail the benefits of the export incentive.
Availability of Growth-oriented Schemes
To expand the exporting capabilities of the country, the GOI in association with several authorities has launched ample schemes under which a wide array of subsidies is provided to the companies including the starts up. After filing Letter of Undertaking under Goods and Services Tax, the exporters don’t have to address tax obligations to make exports. Some of the viable benefits that the government offers to export companies are as follow:
Duty Drawbacks
Duty drawbacks are an incentive scheme that promotes the trading of exportable goods. Essentially, duty drawback fetches more overseas exchanges for the country and acts as a core catalyst for export. In general, duty drawback is referred to as a waiver or reduction in whole or in part of customs duties assessed upon the importation of goods.
Merchandise Exports from India Scheme (MEIS)
Through this scheme, the startups can avail rewards to offset the overhead cost and infrastructural inefficiencies. The MEIS scheme is essentially launched as an incentive scheme to boost the exporting activities within the country. The MEIS scheme is all about the Duty Credit Scrips that helps in:-
- Paying basic & additional customs duty prescribed u/s 3(1), 3(3), and 3(5) of the Customs Tariff Act, 1975, for importing of input as well as capital goods, expect items enlisted in Appendix 3A.
- Paying central excise duties on the inputs procured domestically.
- Paying basic & additional custom duty mentioned u/s 3(1), 3(3) and 3(5) of the Customs Tariff Act, 1975 & fees prescribed under paragraph 3.18 of this Policy.
Service Exports from India Scheme (SEIS)
Service Exports from India Scheme (SEIS) essentially intends to facilitate the export of service from our country by rendering duty scrip credit for eligible exports. As per the scheme, service providers from Indian Territory would be eligible to avail of reward under the SEIS scheme, for all
Exemption on GST
Exporters across the nation are exempted from paying GST on exportable goods after filing the Letter of undertaking- LUT. Business owners who opt to file GST before dispatching the shipment to overseas locations can file the return for the same.
Conclusion
We hope this write-up provides you enough reasons on why the IEC for Startup could be beneficial in India. IEC is mandatory, and you must obtain it without exception before setting up an exporting business. Connect with Corpbiz expert if you need professional-grade services for the same.
Read our article: DGFT to Rolled Out Revamped Online Services for IEC Holders
