Start Garment Export Business: Concept & Licenses Required
Shivani Jain | Updated: Jan 11, 2021 | Category: Business, IEC
At a global level, India ranks at the second position in exporting apparels and textiles, and as a result, it works with a huge manufacturing base and massive raw material. Further, this sector works as a substantial contributor both in terms of exports and domestic shares and contributes around 7% to the industry output, 2% in GDP [1](Gross Domestic Product), and 15% to the total export earnings. Therefore, nowadays, every entrepreneur who wants to reach global market tends to start garment export business in India.
In this blog, we will discuss the concept and licenses required to start Export Business in India, together with its ongoing growth statistics.
Table of Contents
Reasons to Start Garment Export Business in India
The reasons to start garment export business in India are as follows:
- Emerging Industry in the Foreign Market;
- Comparatively Low in Cost than Other Foreign Countries;
- Easy Way to Access Global Market;
- Acts as a Large Source of Job Creation;
- Market Driven Industry;
- Contributes Around 2% in Total GDP;
- Continuous Increase in Demand;
- Forms 15% of the Total Export Earnings;
- Apparel Export Promotion Council (AEPC) is continuously working hard to increase Garment Export from India;
Growth of Garment Export Business in India
The growth rate of Garment Export Business in the past few years can be summarised:
- As per a report published by IBEF (India Brand Equity Foundation), in the month of November 2020, certain observations were made as follows:
- The total export of apparel and clothing accessories, both knitted and crocheted, during the period of April to July 2020 was the US $1.32 billion. Moreover, for the month of July 2020, the same was the US $586. 49 million;
- The total export of apparel and clothing accessories, both knitted and crocheted, during the period of April to July 2020 was the US $1.27 billion. Moreover, for the month of July 2020, the same was the US $504.98 million;
- The main foreign markets for the export of Indian textiles and apparel export are as follows:
- USA;
- European Union ;
- Parts of Asia;
- Middle East;
- In future, the total export of textiles and apparel is projected to reach the US $82 billion by the end of the year 2021. Also, the same will rise at CAGR 12.06% from the financial year 2018;
- Based on a report named “India- The Knitting Future”, published by Invest India, the observations made are as follows:
- The total FDI (Foreign Direct Investment) in the textile and apparel industry has surpassed the US $3.45 billion during the year 2020;
- The total exports in the textile and apparel sector is projected to reach the US $300 billion by the end of the financial year 2024 to 2025. Also, the same will result in a tripling of the Indian market share from prevailing 5% to 15%;
Major Players of Clothes Export Sector
The major player of the Clothes Export Sector in India are as follows:
- Shahi Exports;
- Orient Craft Ltd.;
- Pearl Global Industries Ltd.;
- Eastman Exports Global Clothing (Pvt) Ltd.;
- Arvind Lifestyle Apparel: Garments Business;
- Shivalik Prints Ltd;
- Gokaldas Exports Limited;
- Quantum Knits (KPR Mill Limited);
- PratibhaSyntex;
- Gokaldas Images Pvt. Ltd.;
Major Importers of Export Clothes From India
The major importers of Indian Export Clothes are as follows:
- United States of America;
- Bangladesh;
- United Arab Emirates;
- United Kingdom;
- China;
- Germany;
- Spain;
- France;
- Italy;
- Netherlands;
- Turkey;
- Vietnam;
- Sri Lanka;
- Brazil;
Factors To Consider To Start Garment Export Business In India
The factors to consider to start garment export business in India are as follows:
- Incorporate an LLP/ Partnership Firm/ or Private Limited Company;
- Obtain the Licenses and Permits Needed to Start Garment Export Business;
- Choose a Target Country;
- Engage with the Garment Suppliers;
- Find Prospective Buyers;
- Examine the Market Competition;
- Set the Overall Profit Margin;
- Understand the Laws and Regulations of the Target Country;
- Decide the Mode of Payment Method from the Target Country;
- Determine the Mode of Shipment;
Documents Required To Start Garment Export Business in India
The documents required to start garment export business in India are as follows:
- A copy of COR (Certificate of Registration);
- PAN Card of the Applicant;
- Latest Passport-sized photograph of the Applicant;
- A Cancelled Cheque;
- Identity Proof: Aadhar Card, Voter ID, and Driving License.;
- Address Proof of the Applicant’s Registered Office
- A copy of the Sale Deed, in the case of Self-owned Property;
- A copy of the Rent Agreement, in the case of Rented Property;
- Utility Bills, such as Water Tax Receipt or Electricity Bills;
- A copy of AOA and MOA;
- A copy of LLP Agreement, in the case of an LLP;
- A copy of Registered Partnership Deed, in the case of a Partnership Firm;
- Certificate of GST Registration;
- Import Export Code (IEC);
- Udyam or MSME Registration;
- RCMC for Textile and Apparel;
Licenses Required To Start Garment Export Business in India
The licenses required to start garment export business in India are as follows:
Company Registration
To start garment export business in India, the individual or the applicant needs to first acquire either an LLP Registration/ Private Company Registration/ Partnership Firm Registration in India.
However, it shall be pertinent to take into note that the business setup which is most appropriate to start garment export in India is LLP or Limited Liability Partnership, as this format offers benefits of both a Partnership Firm and Private Company.
GST Registration
In India, it is obligatory for every IEC Holder to file an application for GST Registration irrespective of his/her aggregate annual business turnover.
Import Export Code
Every individual who wants to start garment export business in India needs to acquire IEC Registration by submitting an online application on the official website of DGFT (Director General of Foreign Trade).
MSME Registration
To start garment export business in India, one of the most significant licenses is Udyam or MSME Registration. Further, the term MSME stands for the Micro Small and Medium Enterprises.
Registration cum Membership Certificate
Lastly, the applicant needs to apply for RCMC or Registration cum Membership Certificate from APEC (Apparel Export Promotion Council). Also, it shall be taken into consideration, it is a must requirement to apply for RCMC as it signifies that the applicant has complied with all the guidelines issued by the APEC.
Conclusion
At times, a simple and straight looking online process could turn out to be a muddle of intricacies for an applicant. Thus, it is always advisable for the applicant who desires to start garment export business in India to reach out to Swarit Advisors, as our experienced and dedicated professionals are always there to solve out all the problems, issues and hardships relating to licenses and registrations required.
Also, Read: Common Mistakes in Import Export Business: How to Avoid them?