Your First Export from India:
What You Must Get Right
"The product is ready. The buyer is asking. But no one told me what the first step was." — This is what I hear most often from first-time exporters in India.
India's artisans, handicraft makers, manufacturers, and SME founders have always had product quality. What slows down the first shipment is almost never the product — it is the paperwork, the registrations, the compliance foundation that nobody explains clearly.
This guide covers everything a first-time exporter in India needs to know, in plain language, in the right order. Whether you make furniture, textiles, handicrafts, engineering goods, or any other exportable product — these are the essentials.
Step 1 — GST Registration and LUT Filing
GST Registration
GST registration is mandatory for export invoicing. Even if your domestic turnover is below the GST threshold, you need registration to export goods and claim scheme benefits.
LUT — Letter of Undertaking
This is the step most first-time exporters miss — and it costs them cash flow.
An LUT allows you to export without paying IGST upfront. Without it, you pay 18% GST on every export invoice and then apply for a refund — which can take months.
- Filed online on the GST portal
- Valid for one full financial year
- Free to file — no fee
- Must be renewed at the start of every financial year
- New financial year (2025–26) has just started — file now
Common mistake: Many first-time exporters ship without filing LUT, pay GST upfront, and then spend months chasing a refund. File your LUT before your first invoice is raised.
Step 2 — Get Your IEC (Import Export Code)
IEC — Import Export Code
The IEC is the single most important registration for any exporter in India. Issued by DGFT (Directorate General of Foreign Trade), it is your licence to export.
Without an IEC: No shipment can legally leave India. No foreign payment can be received in your bank account. No government export scheme applies to your business.
- One-time registration — no renewal, no expiry
- Applied online at dgft.gov.in
- Issued in 2–3 working days on average
- Linked to your PAN — one IEC per PAN
- Required for both goods and services exports
Important: If you already have an IEC from a previous business or employment context, verify its status on the DGFT portal before your first shipment. A flagged or inactive IEC will stall your export at customs.
Step 3 — HSN Classification of Your Product
HSN Code — Harmonized System of Nomenclature
Every exportable product has an HSN code — an internationally recognised classification number. Getting this wrong has consequences that go beyond a customs delay.
- Wrong HSN = wrong duty rate applied at customs
- Wrong HSN = ineligibility for RoDTEP, Duty Drawback, and other schemes
- Wrong HSN = potential mismatch with buyer's import declaration — which creates disputes
- HSN must match across your export invoice, shipping bill, and packing list
For handicraft and artisan products, HSN classification requires care — solid wood furniture, metal craft, textile craft, and stone craft all have different codes, different duty implications, and different scheme rates.
Reference: Check HSN codes and duty rates on the ICEGATE portal or the CBIC website. When in doubt, get it reviewed by a qualified EXIM consultant before filing your first shipping bill.
Step 4 — Understand Incoterms Before You Quote
Incoterms — Who Is Responsible for What
Incoterms (International Commercial Terms) define who bears the cost and risk of shipping at every stage — from your factory floor to the buyer's warehouse. Quoting the wrong Incoterm has caused exporters to absorb freight and insurance costs they never accounted for.
- FOB (Free On Board) — Your responsibility ends at the port of loading. Buyer arranges and pays for international freight and insurance. Most common for first-time exporters.
- CIF (Cost, Insurance, Freight) — You arrange and pay freight and insurance to the destination port. More control, more responsibility.
- EXW (Ex Works) — Buyer picks up from your premises. Rarely used in practice for international trade.
- DAP (Delivered at Place) — You deliver to buyer's named destination. Maximum responsibility on the exporter.
For first-time exporters: Start with FOB. It is understood by most international buyers, keeps your risk boundary clear, and is the most common basis for freight forwarder quotes in India.
Step 5 — Payment Terms and the Golden Rule
Payment Terms — Protect Your Cash Before the Shipment Moves
This is the area where first-time exporters take the most financial risk. A wrong payment term, combined with a wrong Incoterm, can result in goods dispatched and money never received.
- Advance Payment (TT Advance) — Full or partial payment before shipment. Safest for the exporter. Common for small orders and new buyers.
- LC (Letter of Credit) — Bank-backed payment instrument. Protects both parties. Preferred for large orders.
- DP (Documents against Payment) — Buyer pays on presentation of documents. Some risk — buyer can delay.
- DA (Documents against Acceptance) — Buyer accepts a bill of exchange — pays later. Highest risk for the exporter.
Golden Rule: For your first shipment and for every new buyer — no purchase order is placed with your supplier, and no goods are dispatched, until the buyer's advance payment is received in your bank account. This is non-negotiable.
Step 6 — Core Export Documents
Every export shipment requires a standard set of documents. Missing or incorrect documents can delay customs clearance, hold up your payment, and create disputes with the buyer.
- Commercial Invoice — Price, quantity, buyer/seller details, Incoterm, payment terms, HSN code
- Packing List — Detailed list of contents, weights, dimensions per package
- Shipping Bill — Filed on ICEGATE, required for customs clearance at the port
- Bill of Lading / Airway Bill — Issued by the carrier, acts as the title document for the goods
- Certificate of Origin — Required by many buyers and countries for duty preference under trade agreements
- GST Invoice with LUT reference — Must clearly state "Export under LUT without payment of tax"
Note: Some product categories and destination countries require additional documents — phytosanitary certificates, quality inspection certificates, pre-shipment inspection reports. Confirm requirements with your freight forwarder and the buyer before shipment.
Step 7 — Government Schemes for Exporters
Once your compliance foundation is in place, several government schemes can improve your margins and cash flow. These are not automatic — you need to claim them with the correct documentation and HSN codes.
| Scheme | What It Does | Who Benefits |
|---|---|---|
| RoDTEP | Remission of embedded taxes and duties not refunded elsewhere. Credited as transferable scrip. | Most goods exporters. Rates vary by HSN. Check current DGFT schedule for your product. |
| Duty Drawback | Refund of customs duty paid on imported inputs used in export production. | Exporters using imported raw materials or components. |
| Interest Equalisation Scheme | Subsidised interest on pre and post-shipment export credit from banks. | MSME exporters and specific product categories. |
| NIRVIK / ECGC | Export credit insurance against buyer default and political risk. | Exporters offering credit terms to buyers — reduces payment risk. |
| MAI Scheme | Market Access Initiative — government funding support for participation in international trade fairs and buyer meetings. | Exporters looking to enter new markets or develop buyer relationships abroad. |
For detailed scheme information, refer to the DGFT official portal and the Ministry of Commerce and Industry.
Your First Export — Quick Readiness Checklist
- IEC obtained and active on DGFT portal
- GST registration in place
- LUT filed for current financial year (2025–26)
- HSN code confirmed for your product
- Incoterm agreed with buyer and reflected in all documents
- Payment terms confirmed — advance received before dispatch
- Commercial invoice, packing list, and shipping bill ready
- Freight forwarder identified and budgetary quotes obtained
- Bank account linked to IEC for foreign remittance receipt
- RoDTEP and Duty Drawback eligibility checked for your HSN
Not sure where you stand?
Book a complimentary 30-minute strategy session. We review your export readiness, identify gaps, and give you a clear next step — no jargon, no overwhelm.
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