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Pankaj Tyagi
| Updated: 30 Dec, 2020 | Category: IEC

How to Setup a Cocoa Export Business in India

Cocoa Export Business

Are you willing to set up a profitable Cocoa Export Business in India? You have landed on the right page. This blog will shed some light on the legal obligation for setting up a Cocoa export business in our country. Before we get to our main topic, let us have an outlook on cocoa production and export in India. 

Outlook on the Cocoa Production and Export in India 

Cocoa is a prime ingredient for chocolate production around the world. In India, Cocoa[1] is largely cultivated in the country’s southern region, such as Kerala, Karnataka, Andhra Pradesh, and Tamil Nadu. The total production of the cocoa till December 2020 stood at 16,050 MT. Andhra Pradesh leads from the front as far as cocoa’s production volume is concerned in the country. Meanwhile, in terms of cultivating the area, Tamil Nadu secured first place. Kerala has the upper hand on account of production volume per hector. Until now, Kerala’s productivity accounted for 785kg/ha compared to the country’s average productivity of cocoa, which stood at 475 Kg/ha.

Cocao is an exportable commodity, and it has a mountainous demand around the world. At present, dozens of bigger organizations from overseas locations operate in our country as cocoa producers. They are also engaged in exporting commodities like chocolates, beans, cocoa powder, and cocoa butter to other nations. India’s export for cocoa in 2020 accounted for Rs 849 crores in total, which is relatively better than the preceding year’s export volume. 

Who are the Major Importer of Cocoa Beans around the World? 

There is a great demand for cocoa beans around the world. At present, India is exporting high-quality cocoa beans to the following nations. 

  • Belgium
  • United State of America
  • Russia
  • Netherlands
  • Japan
  • Ghana
  • Switzerland
  • New Zealand

How to Set Up a Cocoa Export Business in India? 

The export of edible commodities attracts some mandatory licenses such as FSSAI, APEDA, ISO, IEC, and GST. The following section will provide some crucial briefing on all of them subsequently.

Required License for Cocoa Export Business

FSSAI Food License 

At present, every food business operators in India is required to obtain the FSSAI food license without exception. FSSAI Food License encompasses a broader landscape of edible items, including dairy products, sweets, fisheries products, cereals, meat products, and functional foods.

This license is now mandatory for cocoa business, whose supplies are mainly routed to the several counties in the world. Currently, FSSAI offers 4 types of food licenses in our country, depending on the business’s nature and stature. These include Central, State, Simple registration, etc. 

APEDA 

APEDA is also known as the Agricultural & Processed Food Products Export Development Authority. The primary objective of APEDA is to promote the export of scheduled products through various initiatives and programs. The cocoa producer can apply for this license on an APEDA online portal.

The amount of Rs 5000 has to be paid by the applicant as the registration fee for this license. The APEDA is mandatory to set up Cocoa Export Business in India. Keep in mind that the applicant has to avail IEC in the first place to acquire this license. 

IEC (Import Export Code)

Import Export Code is issued by the Directorate General of Foreign Trade. A business engaged with the EXIM business would need to secure this license for shipping products outside the nation. The absence of such a license mitigates the right of shipping commodities abroad.

To secure this license, the applicant must visit the DGFT online portal and fill on the e-form for the same. The online application will go along with some mandatory documents and requested fees. IEC registration is absolute necessity to establish a Cocoa Export Business in India.

ISO 22000 

Most international buyers worldwide prefer to buy out edible items from ISO 22000 certified entities. It’s an utmost requirement for an entity dealing in the food processing and manufacturing business. Since this certification has global recognition, it’s not easy to obtain. Having this certification not only exhibits that company is following strict measures to ensure the utmost quality of their product but also shows their commitment towards their customers. 

Now let’s talk about the most common license required to ship the edible item outside India, i.e. Import Export Code. The section below would provide a complete briefing on the online procedure to obtain this code.

The Online Process to Obtain the Registration for Import Export Code for Cocoa Export Business

In mid-2020, DGFT came up with a new online platform related to the IEC registration. The platform was meant to encounter the basic issues with the registration process. As compared to the previous version, the new platform is highly simplified and user friendly. Here’s what you need to do to get online registration of the Import Export Code. It’s a compulsion for the owner of Cocoa Export Business to secure this license.

  • First, open the DGFT website and click on the “Apply for IEC” button located on the home page. 
  • Fill up the blank fields with your personal information in the registration windows, and then click on the “Send OTP,” button. 
  • You will receive the One Time Password on your email and phone number that you have entered at the time of registration. 
  • Get back to the home page and then login again. This will give you access to the IEC registration form.
  • First, enter the detail regarding the ownership type, followed by the bank info. Once done, upload the soft copy of the canceled cheque and then hit the “Save and Next” button.
  • Proceeding further, select preferred sectors of operations followed by Acceptance of Undertaking/Declaration.
  • Next, hit the “Save and Next” button following by the Sign tab. 
  • Choose the correct method for form submission, i.e. DSC (Digital Signature Certificate) or Aadhar OTP. 
  • Submit the requested fees as mentioned on the form through the payment gateway. 
  • After submitting the required fee, you can download the receipt as well as the copy of IEC certification. 

Best Known Strategies to Ensure the Seamless and Secure Shipment of Cocoa

  • It is advisable for the exporter to figure out standard price in accordance with the international market if the export volume of cocoa is higher.
  • Exporter must ask the buyer to agree to Cash against Documents (CAD) for signing any contract. The CAD is the most widely used payment form among businesses dealing with international trading of goods.
  • If buyer is unwilling to opt for the said payment form then letter of credit (L/C) could proof to be handy in such a situation. Even though L/C is a costly affair for the buyer because of ample paperwork, however it still stands as a most secured payment option for the exporter.
  • Do not export goods without agreeing on the terms of payment with the buyers. If possible, use Free on Board terms to minimize the risk associated with the shipment of the product. Under Free on board term, the ownership of the cargo will be transferred to the buyer at the point of departure from shipping dock of the supplier.
  • Exporter may choose to opt out Cost, Insurance, and Freight (CIF) for the cocoa export. The terms under the CIF restrained the exporter and make him accountable for the loss or damages of cocoa beans during transport. On the contrary, if the exporter opts the CIF term, then he/she would be liable to obtain a marine insurance from legitimate company or third-party broker to secure the goods during transport.
  • Draft a sale contract with the buyer only after agreeing to price, product, and shipment terms.
  • Nearly every shipping document must consolidate the HS code, aka Harmonized system code and IEC number to minimize the time for inspection at the port.

Conclusion 

At times, a simple online process could turn out to be a clutter for an applicant. In such a situation, the applicant may either opt to restart the whole process again or left it completely. Fortunately, now you don’t have to encounter that hardship anymore. The professional at the CorpBiz knows how to overcome these adversities with a simple and straightforward approach. We can also guide on how to set a profitable Cocoa Export Business in India.

Read our article: Important Prerequisites to considers for the Export of FMCG Product from India

Pankaj Tyagi

Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.

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