India is the world’s second-largest exporter of garments and textiles, and therefore, has a large industrial infrastructure and a large supply of raw materials. Moreover, this sector is a major provider in clothing exports, and domestic shares contribute to nearly 7% of industry output, 2% of GDP, and 15% of total garment export revenues.
So, every entrepreneur who wants to get into the global market wants to build a garment export industry in India. Let’s discuss the concept and licenses required to start a garment export industry in India and the country’s current growth figure.
The Benefits of Starting a Garment Export Company in India
The following are some of the reasons why you should start a clothing exports business in India:
- The Foreign Market for Developing Industries.
- Prices are lower than in other foreign countries.
- Easy Access to the Global Market.
- Helps in the formation of a large number of jobs.
- Contributes around 2% of total GDP.
- Demand is continuing to rise.
- It provides for 15% of total export earnings.
- The Apparel Export Promotion Council (AEPC) is working hard to increase India’s garment exports.
Things You Should Consider Before Starting a Garment Export from India
The following are some of the factors to consider while starting a garment export business in India:
- Start an LLP (Limited Liability Partnership) or a Private Limited Company.
- Get the necessary licenses and permits to start a garment export business.
- Choose one country as your target.
- Engage with the Garment Providers.
- Find potential buyers.
- Examine the competition in the market.
- Determine the overall profit margin.
- Understand the target country’s laws and regulations.
- Choose a payment method from the target country’s options.
- Set the shipping method.
Growth of garment exporters in India
The following is a summary of the garment export business’s rate of growth during the last few years. As per a report published by IBEF (India Brand Equity Foundation) in November 2020, made the following observations:
- From April to July 2020, the total export of improved and crocheted clothes and clothing items was $1.32 billion. Similarly, for July 2020, the same is $586.49 million.
- From April to July 2020, the total export of knitted and crocheted clothing and accessories was $1.27 billion. Furthermore, the same was $504.98 million for July 2020.
- By the end of 2021, overall textile and clothing exports are expected to reach $82 billion in the United States. From the financial year 2018, the same will grow at a CAGR of 12.06 percent.
- In the year 2020, total FDI (Foreign Direct Investment) in the textile and clothing industry will surpass $3.45 billion.
- The textile and apparel sector’s total textile exporters in India are expected to reach $300 billion by the close of 2024-2025. In addition, the Indian market share will double from 5% to 15% due to this.
Documents Required To Start Garment Export Industry in India
The following documents are necessary to start a garment export business in India:
- A COR(Certificate of Registration) copy
- A copy of Pan card
- Applicant latest passport size photo
- Canceled cheque
- Adhar card
- Water id
- Driving license
- Applicant’s registered office
- A copy of the sale deed
- A copy of the rental agreement
- Water Tax Receipt or Electricity Bills
- AOA and MOA copy
- A copy of the LLP Agreement
- A copy of the Registered Partnership Deed
- Certificate of GST Registration
- Import Export Code (IEC)
- Udyam or MSME Registration
- RCMC for Textile and Apparel
Licenses Required to Start Garment Export from India
- Company Registration
To begin a garment export business in India, an applicant or company must apply for an LLP registration, a private company registration, or a partnership firm registration. However, it is important to remember that the best business structure for starting garment export in India is an LLP, or Limited Liability Partnership, which combines the advantages of a partnership firm and a private company.
- GST Registration
Regardless of the total yearly businesses registered in India, every IEC holder must apply for GST Registration.
- Import Export Code
Anyone who wants to start a garment export business in India must get IEC Registration by completing an online application on the DGFT’s (Director General of Foreign Trade) official website.
- MSME Registration
One of India’s most important licenses to start a garment export business is Udyam or MSME Registration. In addition, MSME stands for Micro, Small, and Medium Enterprises.
- Registration cum Membership Certificate
Last, the applicant must apply to APEC for an RCMC or Registration and Membership Certificate (Apparel Export Promotion Council). It is a mandatory requirement to apply for RCMC as it verifies that the applicant has followed all of the APEC’s requirements.
Steps to Start a Garment Exporters in India
Let’s take a look at the various steps to starting a garment export industry in India.
- Create an organization
The first stage in starting an export business is establishing a private company, partnership firm, or corporation, as the rules require.
- Procure the necessary licenses
Every clothing export should follow a complete procedure and apply for a required license. Above, we have discussed the required licenses to start a garment export house.
- Make an export strategy
All businesses that deal with imports and exports must have an import-export business plan. The garment export plan lays out the steps your textile company will need to take to grow its worldwide sales.
- Financial analysis
Before beginning your garment business, properly examine both internal and external funding options.
- Choose your product
Identify the type of product you want to produce and export. Keep the product profile brief so you can focus on the items that matter.
- List out the type of machines
The next step is to develop a list of the types of machinery and the number of machines required now that you have a clear idea of the production figure and the type of product.
- Getting raw materials
Pay attention to the raw materials used in manufacturing. Make a comparison between several vendors and select the best one based on the pricing and material quality.
- Plan your factory area
There are different ways of carrying out the manufacture of your garment export house. You have the choice of renting and buying a factory space.
- Get garment export orders
Getting orders for your clothes is the most difficult part. Reaching out to international garment traders via email. Introduce yourself, your business, and the different clothing items with which you sell.
We hope the advice given above will help you in establishing a profitable export garment manufacturer in India