Here's a detailed analysis of why foreign businesses
might choose India for imports, considering various factors and recent
developments:
Diversification of Supply Chains
One of the primary reasons to choose India for
imports is the potential for lower tariff rates compared to other major trading
partners like China. As of April 27, 2025, India's imports face a 26% tariff,
which is notably lower than the tariffs imposed on Chinese goods, which can
reach up to 145% or even 245% when combined with existing duties. This makes
importing from India more cost-competitive, potentially reducing the overall
cost of goods and helping businesses maintain profitability or lower consumer
prices. Furthermore, India has a 90-day reprieve for reciprocal tariffs,
providing temporary relief, although this may not be permanent.
Strategic Trade Advantages
The ongoing U.S.-China trade war has prompted
companies to diversify their supply chains to mitigate risks associated with
high costs and geopolitical tensions. India has emerged as a viable
alternative manufacturing hub, supported by initiatives like "Make in
India," which encourages domestic production. Importing from
India reduces reliance on Chinese supply chains, which are vulnerable to
disruptions from tariffs, retaliatory measures, or geopolitical issues. India's
large workforce and growing manufacturing sector make it a viable alternative
for goods like electronics, textiles, and pharmaceuticals.
Growth in Manufacturing and Export Capacity
India's merchandise exports to the U.S. constitute
a smaller portion of its economy compared to China's export-driven model. Only
18% of India’s merchandise exports go to the U.S., giving India more
negotiating leverage in trade talks. This lower dependence on U.S. exports
means India can negotiate trade terms with less pressure to make concessions,
potentially securing favourable conditions for U.S. importers.
Potential for Bilateral Trade Agreements
India's expanding manufacturing base offers a
reliable supply of goods, particularly in sectors less affected by tariffs,
such as pharmaceuticals and IT services. India's exports to the U.S.
reached a record $86.51 billion in 2024-25, with a 35% surge in March alone,
driven by sectors like pharmaceuticals, IT services, and engineering goods.
Geopolitical Alignment and Stability
India is actively pursuing bilateral trade
agreements with the U.S. to mitigate the impact of tariffs and enhance
competitiveness. A successful trade deal could reduce or eliminate tariffs
on key Indian exports, making imports from India even more cost-effective.
Sector-Specific Advantages
Importing from India aligns with U.S. geopolitical
priorities, potentially reducing regulatory scrutiny and fostering long-term
trade stability. India’s democratic system and alignment with Western
interests make it a less risky partner compared to China.
Mitigating Risks of Chinese Overcapacity and
Dumping
Certain sectors in India offer specific
advantages. India’s pharmaceutical sector, contributing $12.2 billion to U.S.
exports, is currently exempt from the 26% tariff, unlike Chinese syringes and
needles. India's IT services are also unaffected by goods tariffs. Textiles
and jewellery exports face lower tariffs than Chinese goods.
India's Economic Growth and Investment Climate
Importing from India avoids direct exposure to
Chinese dumping, which is heavily penalized in the U.S. and India. India’s
efforts to protect its industries could ensure a more stable supply of goods
compared to China’s volatile market.
India as a China +1 Destination
India's economy is experiencing robust growth,
with a 6.6% growth rate in 2024, making it the world's fifth-largest economy. The
country is projected to surpass Japan by 2025 to become the fourth-largest
global economy. India has improved its business climate through
comprehensive reforms, rising in the World Bank's Doing Business Report
rankings. FDI inflows have increased significantly, demonstrating India's
attractiveness as a global investment destination.
The U.S. has imposed new tariffs on Chinese
imports, prompting businesses to diversify their sourcing and production. India
offers a large, young population and lower labor costs compared to China. India's
hourly labor cost is roughly one-third the cost of the same hour in China.
Therefore, the key reasons to choose India for
imports include lower tariffs, supply chain diversification, strategic trade
advantages, growing manufacturing capacity, potential for trade agreements,
geopolitical alignment, sector-specific advantages, and India's robust economic
growth and investment climate.
Advantages of
Importing from India
Here's a breakdown of the advantages of importing
from India, considering the most recent information available as of June 29,
2025:
Competitive Pricing
Importing from India offers several compelling
advantages for businesses, particularly those in the UK. These benefits stem
from India's robust manufacturing base, competitive pricing, and government
support for exporters.
One of the most significant advantages of
importing from India is the competitive pricing.
Low labor costs in India often translate to more
affordable products compared to those from other countries, allowing UK
businesses to maximize profit margins. This cost-effectiveness is a key
driver for businesses looking to source goods efficiently.
Diverse Product Range / High-Quality Products
India is a major exporter of a wide array of
products, providing UK businesses with a diverse selection to choose from. This
diversity means that UK businesses can find almost any product they need,
making India a one-stop-shop for various import needs. This includes
textiles, machinery, consumer electronics, and pharmaceutical products.
Government Support
Indian manufacturers are known for producing
high-quality products that meet international standards. Whether it’s
intricate jewellery, durable leather goods, or effective organic supplements,
you can trust that Indian products will satisfy your quality requirements. This
commitment to quality is supported by stringent quality assurance frameworks
and regulatory bodies like ISO certifications and pharmaceutical compliance
with US FDA and EU GMP regulations.
Growing Economy
The Indian government provides various incentives
and support to exporters, which can indirectly benefit UK importers. These
incentives can lead to better pricing, improved product quality, and more
reliable supply chains. Export promotion schemes like MEIS (Merchandise
Exports from India Scheme) and RoDTEP (Remission of Duties and Taxes on
Exported Products) reduce costs for exporters, which can translate into savings
for importers.
Several
product categories from India are particularly attractive for import:
Specific Product Opportunities
India's rapidly growing economy presents numerous
opportunities for UK businesses. As India's middle class expands, so does
the demand for imported goods, creating a symbiotic relationship where both
Indian exporters and UK importers can thrive.
Benefits for the UK Economy
Regional Handicrafts: India is the largest
exporter of traditional handicraft items among all other developing countries. In
the fiscal year 2023-24, India’s handicraft exports were valued at
approximately US$ 3.29 billion.
Jewellery and Precious
Stones: India's
gem and jewellery exports were valued at US$ 17.17 billion during April-October
2024.
Organic Supplements and
Medicines: The
export value of Ayush and herbal products reached approximately US$ 651.17
million in the fiscal year 2023-24, marking a 3.6% increase from the previous
year.
Leather Products: During April-October
2024, exports of leather and leather manufactures from India were valued at US$
2.73 billion, a 1.99% increase compared to the same period in the previous
year.
Homeopathy Medicines: The overall Ayush
and herbal products sector, which includes homeopathic products, saw exports of
US$ 651.17 million in 2023-24.
Ceramics: The export value of
ceramic and glassware products was US$ 3.77 billion during April-October 2024.
Textile Products: India is a
significant player in the global textile industry, with a rich history of
producing high-quality fabrics and garments. The UK is one of the largest
importers of Indian textile products.
Considerations for Importers
Importing from India can also benefit the UK
economy by providing consumers with more choices and potentially lower prices. This
can help manage household budgets and stimulate economic activity.
While there are many advantages, importers should
also be aware of the regulations and logistics involved. This includes
understanding UK import regulations, such as import licenses, customs
requirements, and VAT and duty rates.
Establishing the Foundation for Exports: Initial
Requirements
Here's a detailed guide to the essential documents
required for exporting from India, drawing upon authoritative sources and my
own knowledge. Exporting involves a series of steps, each requiring specific
documentation to ensure legal compliance, smooth customs clearance, and
efficient financial transactions.
Before initiating any export activities, several
foundational steps are crucial. These steps ensure that the exporter is legally
recognized and authorized to engage in international trade.
Essential Documents for Export Shipments
- Establishing an organization: The first step involves setting up a business entity, such as a One Person Company, Partnership firm, or Private Limited company, or Public Limited Company following the established procedures. This entity will serve as the legal framework for the export business.
- Opening a Bank Account: A current account or business account must be opened with a bank authorized to deal in foreign exchange. This account will be used to receive export proceeds and manage international financial transactions.
- Obtaining Permanent Account Number (PAN): A PAN is mandatory for all exporters and importers and is obtained from the Income Tax Department.
- Obtaining Importer-Exporter Code (IEC) Number: This is a crucial requirement for all export/import activities in India. The IEC is a 10-digit code issued by the Directorate General of Foreign Trade (DGFT). The application for IEC is filed online at www.dgft.gov.in as per ANF 2A, and an application fee of Rs. 500/- is paid through net banking or credit/debit card along with the required documents. Without a valid IEC, it is impossible to move any goods out of India.
- Registration cum Membership Certificate (RCMC): Exporters need to obtain an RCMC from the relevant Export Promotion Councils (EPCs), FIEO, Commodity Boards, or other authorities. This certificate is essential for availing of benefits and concessions under the Foreign Trade Policy (FTP) and accessing services and guidance.
- AD
Code Registration: A 14-digit Authorized Dealer Code (AD Code) is
provided by the bank to companies dealing in foreign currency. This code
must be registered with the customs department at the port of export via
ICEGATE.
Once the foundational requirements are met, the exporter must prepare
a set of documents for each shipment. These documents are critical for customs
clearance, transportation, and payment.
Proforma Invoice: This document is
used as a negotiating tool between the seller and the buyer before an export
shipment. It includes a description of the goods, quantity, price, weight, and
other specifications. It is a declaration by the seller to provide the products
and services to the buyer at the specified date and price.
Commercial Invoice: This is a legal
document between the exporter and the buyer that clearly states the goods being
sold and the amount the customer is to pay. It is one of the main documents
used by customs in determining customs duties. It includes details of the entire
export transaction, from start to finish, and may look similar to the proforma
invoice but should include additional details such as an order number, purchase
order number, and banking and payment information.
Packing List: This document
provides detailed information about the shipment's contents, including the
seller, buyer, shipper, invoice number, date of shipment, mode of transport,
carrier, and itemized quantity, description, type of package, the number of
packages, total net and gross weight (in kilograms), package marks and
dimensions. It is used by customs officials to check the cargo.
Certificate of Origin: This certificate
specifies the country where the goods originated. It may be required by the
importing country to determine applicable tariffs or trade agreements. It is
usually validated by a semi-official organization, such as a local chamber of commerce.
A certificate may be required even if the commercial invoice contains the same
information.
Shipping Bill/ Bill of
Export: This
is the primary customs document required to export goods legally from India. It
is filed electronically through the ICEGATE portal. The Shipping Bill gives
clearance to exporters from customs.
Bill of Lading/ Air
Waybill: The
Bill of Lading is a contract between the owner of the goods and the carrier.
For ocean shipments, there are two common types: a straight bill of lading,
which is non-negotiable, and a negotiable, or shipper’s order bill of lading.
The Air Waybill is a contract of carriage between the shipper and the carrier
for air shipments.
Export Order or Purchase
Order: This
document confirms the order and includes details such as cost, shipping
details, currency type, and any other specific goods information and
requirements.
Bill of Exchange: This is an internal
document prepared by the exporting party to notify the buyer to pay the
requisite amount to the exporter or bank.
Letter of Credit: This document,
issued by the buyer’s bank, guarantees payment to the exporter, ensuring that
financial hiccups don’t derail the deal. It is a financial safety net, ensuring
commitments are honoured, and the business relationship remains solid.
Inspection Certificate (if
required): Some
products require a quality or safety check before they’re allowed to leave.
This certificate from an authorized agency confirms that the goods meet certain
standards.
Insurance Certificate: This certificate
shows that the shipment is insured during its international journey. It’s
mandatory under CIF (Cost, Insurance, Freight) contracts and often requested by
banks or buyers.
GST Certificate: The government of
India offers concessions and rebates to businesses under the GST. The exporter
will need to produce the GST certificate along with the other export documents.
AD Code Letter: This is a 14-digit
code issued by your bank that links your current account to your export
transactions. You need to register this code at every port you plan to ship
from.
Additional Documents (May be required depending on
the product and destination)
Key Considerations
Certificate of Free Sale: This certificate is
evidence that goods, such as food items, cosmetics, biologics, or medical
devices, are legally sold or distributed in the open market and approved by the
regulatory authorities in the country of origin (the United States).
Shipper’s Letter of
Instruction (SLI): This
document provides the freight forwarder with all the information needed to
successfully move the goods. It may include a limited Power of Attorney,
providing authority to act on your behalf for this shipment.
Dangerous Goods Forms: If the products are
considered dangerous goods, the appropriate dangerous goods form must be
included with the shipment. This is required for air shipments (Shipper’s
Declaration for Dangerous Goods) and ocean shipments.
Phyto-Sanitary &
Fumigation Certificates: These certificates are asked by the importer to check
the quality of the goods under international parameters. To ship agricultural
goods from India, the Phyto-sanitary certificate is indispensable.
Export License: An export license is
a government document that authorizes the export of specific goods in specific
quantities to a particular destination for a particular end-use. This document
may be required for most or all exports to some countries or for other
countries only under special circumstances.
Destination Control
Statement: A
Destination Control Statement (DCS) is required for exports from the United
States for items on the Commerce Control List that are outside of EAR99 or
controlled under the International Traffic in Arms Regulations (ITAR). A DCS
appears on the commercial invoice, ocean bill of lading, or airway bill to
notify the carrier and all foreign parties that the item can be exported only
to certain destinations.
Marine Insurance Policy: Ensures the safety
coverage of the products shipped overseas.
Mate’s Receipt: Confirms the loading
of your goods on the shipment and is issued after the same.
FEMA Declaration for
exporters: This
declaration states that the exporter agrees to comply with the principles of
the FEMA (Foreign Exchange Management Act, 1999).
Let Export Order: Issues after the
customs clearance procedure is completed. Also acts as proof that the necessary
formalities and activities have been fulfilled.
Export General Manifest: After the goods are
relocated from the exporting country, the Manifest is filed by the carrier.
Customs Declaration Form
(CDF): This
form will include details of the goods, shipping information, and a declaration
from the exporter
Contract of export-import: This is the
agreement the importer and exporter have with each other detailing the
transaction in its entirety
Bank Realization
Certificate (BRC): This
proves that the exporter has received payment from the importer as agreed under
the agreement.
By
meticulously preparing and managing these documents, exporters can ensure
smooth and compliant international trade operations.
HS Code: The Harmonized
System (HS) code is crucial for categorizing goods for customs purposes. The
commercial invoice must include the precise description of the goods, including
the HS code.
Country-Specific
Requirements: Different
countries may have specific requirements for import documentation. It is
essential to check with the foreign buyer or a freight forwarder to obtain the
correct information.
Compliance: Accurate and
complete documentation is crucial for compliance with customs regulations and
international trade laws. Failure to comply can result in delays, penalties,
and rejection of the shipment.
Digitalization: Utilizing digital
platforms and software can streamline the documentation process, reduce errors,
and improve efficiency.
The most crucial documents, without which it is impossible to move any goods out of India, are the Import Export Code (IEC) and the Authorized Dealer Code (AD Code).