Coffee is arguably one of the largest traded commodities in the world. It is cultivated in 80 nations and shipped by over 50 in South & Central America, Asia, and Africa. The 25 million coffee growers in the developing nations are mostly small-scale producers. Over 100 million people are involved with the production and processing of coffee worldwide. Clearly, coffee production has a considerable impact o the economic growth of the producing locations & their environment. Around 75% of the overall coffee produced in the nation is shipped to over 88 nations of the world. The top 5 coffee export market for India includes Italy, Russian Federation, Belgium, Spain, and Germany. The Coffee Board of India has taken various initiatives to keep the Indian brands competitive on the international stage. This article underpins the legalities for conducting coffee export from India.
An Outlook on the Coffee Industry and Export
In India, coffee is cultivated in areas that receive 2,500-4,000 mm rainfall for more than three months, following a dry period of the identical timeframe.
Coffee growing locations in the nations have diverse climatic conditions, which are adequate for farming different coffee varieties.
Potential Markets and Export Venues for India
India holds the third position in Asia in terms of production and shipping volume of coffee. Presently, India is rejoicing the sixth position worldwide on the same account.
- The nation accounts for 3.14% (FY 2019-20) of the worldwide coffee production.
- The coffee production accounted for 299,300 (MT) during 2019-20.
- The coffee production during FY 2020-21 stood at 342,000 million tonnes (MT).
Coffee export from India
- The overall coffee export from Indian between April 2019 & March 2020 stood at US$ 738.86 million.
- The overall valuation of coffee export from April 2020 to March 2021 stood at US$ 719.50 million and US$ 97.41million for March 2021
- In April 2021, the export valuation accounted for US$ 71.46 million.
- Almost 70% of home-grown coffee is exported to overseas nations, and the rest is sold domestically.
Legal Requirements for Conducting Coffee Export from India
Following are the mandatory legal prerequisites to be addressed by an entity aiming to conduct the business of coffee export from India.
First of all, you need to set up a firm and convert it into a legalized form by incorporating it into one of the following business structures.
- LLP (Limited Liability Partnership is governed by LLP Act, 2008)
- Private Limited company (comes under the ambit of Company Act, 2013)
- One Person Company (comes under the ambit of Company Act, 2013)
- Partnership firm (pre and post-registration requirements governed by partnership Act, 1932)
After opting out of the suitable business structures, indulges with the relevant pre-incorporation requirements as recommended by the aforesaid Act.
PAN from IT Department
Permanent Account Number or PAN serves as a legitimate source of taxpayer’s identification for the IT department in India. It is a 10-digit alphanumeric number assigned to the eligible taxpayers.
The PAN identification system refers to a computer-oriented system that assigns unique alphanumeric numbers to every Indian taxpayer. Through this method, the tax-based detail for an individual is recorded against an individual PAN number which serves as the key for information storage. This is shared pan India, and therefore no two taxpayers on tax-paying entities can possess the same PAN.
Open Current Bank Account
Current Bank account is a legitimate way of conducting a business-related transaction in India. Every entity, including the export house in India, must have a current account before commencing the business activities. Almost all banks in India provide the facility of current accounts and seek the following documents to open the same.
Importer Exporter Code
Directorate General of Foreign Trade (DGFT) is an apex government institution that grants the Importer Exporter Code (IEC) in India. It is one of the fundamental legal permits to conduct EXIM related activities in India. IEC is a ten-digit identification code that helps exporters to address legal formalities related to the exportation of goods.
DGFT grants the IEC against an online form and the following documents
- Individual’s or Firm’s copy of PAN Card.
- Individual’s Aadhar or passport copy.
- Individual’s or Firm’s cancel cheque issued by the bank against current bank accounts.
- Copy of Rent Agreement or Electricity Bill Copy of the premise.
- An envelope (enclosing applicant’s address) for delivery of Import Export Certificate by registered post.
License from Coffee Board of India
Coffee Board of India grants Export Permits as per the Rule 44(2) Coffee Act 1942 amended over times along with COI (Certificate of Origin) to the registered exporter against their application for coffee export. The registered exporter needs to visit the official portal, viz “indie coffee” and file Export Permit Application (EPA) for securing Export Permit (Form-C) & Certificate of Origin.
The registered exporter shall furnish the post-shipment documentation on coffee export against each export permits secured by them.
The post-shipment documents such as bill of lading, copies of export permits, certificate of origin (COO) duly sanctioned by the relevant Custom Departments, along with other details such as Freight on Board value etc., shall be furnished to the Coffee Board within 45 days from the date of issuance of export permits.
After securing all these licenses, you would become eligible to conduct cross-border trading of coffee from India.
The coffee board of India is taking every possible major to garner a credible reputation for Indian exporters in the international market. The ever rising demand for Indian coffee in overseas location is pushing local growers and producer to crank up the production rate. Presently, coffee business steak to a massive growth potential for local industries and exporters in India
Read our article:How to obtain IEC Code in India