Setting Up an Import Business in India – Steps & Process (2025)

Starting an Import Business in India (2025)

India’s import ecosystem in 2025 presents immense growth opportunities for entrepreneurs and global traders. With a population of over 1.4 billion and a rising demand for foreign goods—ranging from electronics and industrial machinery to specialty foods and cosmetics—the country continues to be a major importer across diverse sectors. Whether you’re planning to import niche products or cater to B2B supply chains, now is the right time to start an import export business in India.

According to the Ministry of Commerce & Industry, India’s merchandise imports crossed USD 715 billion in FY 2023-24, and this number is expected to rise further with the strengthening of bilateral trade agreements and government-backed trade facilitation schemes.

Why Now? India’s Import Opportunity in 2025

• Fast digitization of import-clearance systems through ICEGATE & DGFT portals
• Simplified IEC registration process (Importer Exporter Code) online
• Emerging markets in Tier 2 and Tier 3 cities for consumer imports
• High demand in sectors like renewables, healthcare, EV components, and semiconductors
  

These trends open the door for new businesses to participate in India’s global trade. However, the real differentiator for long-term success is compliance and proper documentation.

Choosing the Right Business Structure for Imports in India

Before you can begin importing goods into India, it’s essential to establish the right legal entity. Your business structure determines your tax liability, compliance requirements, credibility with foreign suppliers, and access to government incentives. Choosing wisely can give your import venture the stability and flexibility it needs to grow.

Types of Business Entities Allowed for Imports

India allows multiple types of business structures for conducting import-export activities. Each has its pros and cons depending on the scale of operations, ownership, and regulatory preferences.

Private Limited Company for Import Business

A Private Limited Company (Pvt Ltd) is the most preferred structure for medium to large-scale importers due to its limited liability protection, corporate identity, and better credibility in global markets.

Benefits:

• Eligible to apply for Importer Exporter Code (IEC)
• Perceived as more trustworthy by overseas suppliers
• Easy to raise funds or attract investors
• Compliant with FDI norms if foreign shareholders are involved
  

Compliance:
Must comply with the Companies Act, 2013. Includes mandatory audit, annual filings, and board governance.

Ideal for:
Entrepreneurs aiming to scale, import high-value goods, or build long-term trade partnerships.

LLP for Import Export India

A Limited Liability Partnership (LLP) combines the operational flexibility of a partnership with limited liability benefits, making it a cost-effective choice for small businesses.

Benefits:

• Fewer compliance requirements compared to a Pvt Ltd Company
• Limited liability for partners
• Can obtain IEC and engage in international trade
• Suitable for professional import partnerships
  

Compliance:
Registered under the LLP Act, 2008. Requires annual filings but no mandatory statutory audit unless turnover exceeds threshold.

Ideal for:
Small import businesses run by two or more partners who want limited liability.

Sole Proprietorship

A Sole Proprietorship is the simplest structure to start an import business in India. It is unregistered and owned by one individual.

Benefits:

• Quick and low-cost setup
• Basic registration (GST, IEC) sufficient
• Suitable for low-volume, low-risk imports
  

Challenges:

• No legal distinction between owner and business
• Difficult to scale or raise external funding
  

Ideal for:
First-time importers testing the market or handling niche, small consignments.

Partnership Firm

A Registered Partnership Firm allows two or more individuals to jointly run an import business.

Benefits:

• Shared capital and risk
• Can obtain IEC and conduct import-export operations
• Easier compliance than a company
  

Challenges:

• Partners have unlimited liability
• Not preferred by banks and foreign vendors for large deals
  

Ideal for:
Small businesses with clear profit-sharing and limited international exposure.

One Person Company (OPC)

An OPC allows a single founder to operate with limited liability—bridging the gap between sole proprietorship and private limited company.

Benefits:

• Single promoter ownership with corporate protection
• Eligible for IEC and import transactions
• Separate legal entity
  

Challenges:

• Cannot have more than one shareholder
• Conversion to Pvt Ltd required after revenue or investment thresholds
  

Ideal for:
Solo entrepreneurs planning to scale gradually while limiting liability.

Mandatory Registrations and Licenses for Importers in India (2025)

Before you can legally begin importing goods into India, you must obtain a few critical registrations. These not only make your import business compliant with Indian laws but also unlock tax benefits, government support schemes, and faster customs clearance. Let’s look at the three key registrations every importer should know.

IEC Registration (Importer Exporter Code)

What is IEC?

The Importer Exporter Code (IEC) is a unique 10-digit code issued by the Directorate General of Foreign Trade (DGFT). It is mandatory for any business or individual importing goods into India. Without IEC, customs authorities will not allow the clearance of imported goods, and banks won’t process international payments.

How to Get Import Export Code in 2025 (Online Process)

As of 2025, IEC registration is a 100% online process through the official DGFT portal:

Steps:

1. Visit DGFT portal and log in using your PAN (or register as a new user)
2. Navigate to “Apply for IEC” under services
3. Fill the online form and upload documents
4. Pay the application fee (currently ₹500)
5. Receive IEC digitally

No physical documents are required, and the certificate is issued electronically.

Documents Required for IEC Registration

• PAN Card (individual or business entity)
• Address proof (utility bill, rent agreement, or property papers)
• Cancelled cheque or bank certificate
• Email ID and mobile number linked to Aadhaar
• Digital Signature Certificate (DSC) for companies/LLPs
  

GST Registration for Importers

Applicability of GST for Importers

Any importer engaged in commercial import of goods into India must obtain GST registration, regardless of turnover. This is because IGST (Integrated GST) is levied on imported goods at the time of customs clearance.

Procedure to Obtain GST Registration for Import Business

1. Register on the GST portal using PAN and mobile number
2. Upload required documents and complete e-KYC
3. GSTIN is issued
   

Required Documents:

• PAN of business
• Aadhaar of proprietor/partners/directors
• Proof of business address
• Passport-sized photo
• Bank account details
  

GST on Imported Goods

• IGST is charged on assessable value + customs duty
• IGST paid at import can be claimed as Input Tax Credit (ITC) in GSTR-3B
• No SGST or CGST is charged on imports
  

UDYAM Registration (Optional but Recommended for MSMEs)

What is UDYAM Registration?

UDYAM Registration is a government initiative to recognize Micro, Small, and Medium Enterprises (MSMEs). While not mandatory for importers, it offers significant benefits for smaller businesses entering global trade.

Benefits of UDYAM for Import Businesses

• Easier access to working capital and import financing
• Subsidies on ISO certifications and barcodes
• Priority in government procurement schemes
• Reduced fees for trademarks and patents
• Lower interest rates under CGTMSE and other credit schemes
  

Integration with IEC for Seamless Operations

• UDYAM registration is now linked to PAN and GSTIN
• DGFT allows auto-verification of MSME status when applying for IEC
• Makes it easier to apply for incentives and schemes from DGFT or MSME Ministry
  

Ideal for: First-time importers, homegrown brands sourcing raw materials, and small B2B operators

Opening a Business Bank Account for Imports in India

To operate a legitimate and efficient import business in India, having a dedicated business bank account for import is essential. This account enables you to handle high-value foreign currency transactions, access trade finance facilities, and comply with Indian regulations under FEMA (Foreign Exchange Management Act).

Opening a bank account aligned with international trade norms also builds trust with overseas suppliers and ensures that cross-border payments and documentation flow smoothly.

Documents Required for Opening a Business Bank Account

When setting up a business bank account for import, Indian banks—especially those authorized for foreign exchange—require specific KYC documents. These ensure that your business is compliant with RBI and DGFT norms.

Required Documents:

• PAN Card (of the business or proprietor)
• Certificate of Incorporation (for Pvt Ltd, LLP, OPC)
• GST Registration Certificate (linked with your PAN)
• Importer Exporter Code (IEC) issued by DGFT
• Address Proof (electricity bill, lease deed, or utility bill of the business premises)
• Cancelled Cheque or Initial Cheque Deposit
  

Foreign Exchange and Payment Mechanisms for Importers

Authorised Dealer (AD) Banks

Only Authorized Dealer Category I Banks, approved by the RBI, can facilitate foreign exchange transactions for imports. These banks handle:

• Foreign currency remittances
• Letter of Credit (LC) issuance
• Bill of Entry filing
• Form A1 submission for import payments
  

Popular AD banks include SBI, HDFC, ICICI, Kotak Mahindra, Axis Bank, and HSBC.

SWIFT Code Usage for International Transfers

Your business bank must be SWIFT-enabled to receive and send foreign currency payments securely. The SWIFT code acts as the international identity of your bank branch and is essential for:

• Sending advance payments to overseas suppliers
• Settling import invoices
• Receiving inward remittances (if applicable)
  

FEMA Guidelines on Import Payments

Under FEMA 1999, importers must:

• Make payments only through banking channels (no cash or hawala transactions)
• Comply with timelines (typically within 6 months of invoice date)
• Submit Form A1 and KYC documents to the AD Bank
• Maintain proper documentary proof (invoice, BoE, shipping docs)
  

Banks are required to report all foreign currency import payments to RBI through the EDPMS (Export Data Processing and Monitoring System).

Currency Conversion and Forward Cover Options

To manage risks arising from forex rate fluctuations:

• Importers can book forward contracts through their AD banks
• Currency conversion charges and exchange rates vary across banks—negotiating better rates is advisable
• Some banks also offer hedging solutions or import credit in foreign currency (FCNR loans)
  

These tools help stabilize your landed cost of imported goods and protect margins.

Setting Up Payment and Logistics Partners for Import Business in India

Beyond business registration and licensing, a key part of launching an efficient import business in India is building the right ecosystem of logistics and payment partners. Two essential pillars of this setup are Customs House Agents (CHAs) and freight forwarders/shipping lines, both of whom ensure your goods move through customs and borders seamlessly.

Choosing the right partners can significantly reduce clearance time, freight costs, and compliance risks.

Choosing a CHA (Customs House Agent)

A Customs House Agent (CHA) is a government-licensed professional or firm authorized to assist importers in clearing goods through Indian customs. For most importers, working with a CHA is a necessity, not an option.

Role of CHA in Import Clearance

A CHA manages the end-to-end process of customs clearance by:

• Filing Bill of Entry (BoE) for imported goods
• Coordinating with customs officers for inspection and valuation
• Ensuring accurate classification of goods under HSN codes
• Handling duty payments and submission of import-related documents
• Managing ICEGATE filings and EDPMS compliance with your AD bank
  

Licensing of CHAs

To operate as a CHA in India, one must be licensed by the Customs Commissionerate under the Customs Brokers Licensing Regulations (CBLR), 2018.

Before hiring a CHA, verify:

• Valid CHA license (issued by Indian Customs)
• Experience with your industry or product category
• Digital capabilities to file documentation via ICEGATE
• References or client history in handling similar volumes
  

Partnering with Freight Forwarders and Shipping Lines

Freight forwarders are the backbone of your international supply chain. While CHAs handle Indian port/customs formalities, freight forwarders coordinate with overseas exporters and carriers to ensure smooth movement of goods.

Booking Freight for Imports

Freight forwarders assist with:

• Selecting the best shipping lines (Maersk, CMA CGM, Hapag-Lloyd, etc.)
• Negotiating competitive rates for FCL (Full Container Load) or LCL (Less than Container Load)
• Coordinating shipment pick-up, loading, transit, and tracking
• Managing port documentation and demurrage avoidance
  

They also help obtain marine insurance and ensure your cargo is protected during transit.

Understanding Incoterms in Import Contracts

Incoterms (International Commercial Terms) are standardized trade terms published by the International Chamber of Commerce (ICC). They define the responsibilities of buyers and sellers in international shipping contracts.

Here are some commonly used Incoterms for importers in India:

Incoterm	Responsibility of Seller	Responsibility of Buyer
FOB (Free on Board)	Exporter covers loading + origin port charges	Importer covers ocean freight + destination fees
CIF (Cost, Insurance, Freight)	Exporter covers shipping + marine insurance	Importer covers unloading + customs
EXW (Ex-Works)	Buyer handles everything from exporter’s premises	High responsibility on buyer

Working with the right CHA and freight forwarder ensures your imported goods move efficiently from international ports to Indian warehouses. This minimizes cost overruns and ensures compliance with Indian customs laws. Up next, we’ll break down the documentation and tax duties every importer must stay on top of.

Compliances and Documentation for Importing into India

Importing goods into India requires strict adherence to documentation and customs regulations. Having the correct paperwork and understanding applicable duties helps avoid shipment delays, penalties, and unnecessary costs. Below is a concise guide to the key import documentation and customs compliance requirements as of 2025.

Import Documentation Checklist

Every shipment must be accompanied by a specific set of documents to clear Indian customs. These documents establish the value, origin, ownership, and classification of the imported goods.

Essential Documents Required for Importing:

1. Commercial Invoice
   
   • Issued by the overseas supplier
   • States price, quantity, product description, and payment terms
     
2. Packing List
   
   • Details quantity, packaging type, weight, and dimensions
   • Helps in physical inspection and handling at ports
     
3. Bill of Lading (Sea) / Airway Bill (Air)
   
   • Issued by the shipping line or airline
   • Proof of shipment and essential for cargo release
     
4. Certificate of Origin
   
   • Identifies the country of manufacture
   • Required for preferential duty under trade agreements
     
5. Insurance Certificate
   
   • Proof of cargo coverage during transit
   • Helps determine customs valuation if loss/damage occurs
     
6. Customs Declaration Form (Bill of Entry)
   
   • Filed electronically via ICEGATE portal
   • Required for assessment and clearance of goods
     

Customs Compliance and Duties in India

After submitting documentation, importers must fulfill customs compliance, including duty payment and correct product classification.

Assessable Value of Imported Goods

Customs duties are calculated based on the CIF value (Cost + Insurance + Freight). This assessable value is determined under the Customs Valuation Rules, 2007.

Types of Duties on Imports

1. Basic Customs Duty (BCD) – Varies by product category
2. IGST on Imports (2025) – Charged at applicable GST rate on assessable value + BCD
3. Social Welfare Surcharge (SWS) – Typically 10% of BCD
   

HSN Codes and Product Classification

• All imported goods must be correctly classified under Harmonized System of Nomenclature (HSN)
• Incorrect classification may lead to penalties, delays, or excess duty
• Refer to the CBIC or ICEGATE portal for the latest HSN-based duty rates
  

Being proactive with import documentation and customs duties helps streamline your clearance process and prevents compliance risks. In the next section, we’ll explore product-specific licenses and how to handle restricted imports in India.

Special Permits and Product-Based Registrations for Imports in India

In addition to standard documentation, some products require special import permits or registrations from regulatory authorities in India. These approvals are necessary to comply with safety, quality, and environmental norms laid out by the government. Understanding whether your goods fall under restricted or regulated categories is crucial before placing import orders.

Restricted & Prohibited Imports in India

Overview Under DGFT Regulations

The Directorate General of Foreign Trade (DGFT) publishes the ITC (HS) classification of import items, which clearly categorizes goods as:

• Freely Importable
• Restricted
• Prohibited
• Canalised (import only through designated agencies like MMTC, STC)
  

Items Requiring Advance License or Approval

Some product categories are restricted for import and can only be brought in with prior approval or a special import license.

Examples include:

• Used electronics or machinery
• Drones and radio transmission equipment
• Medical equipment without CE/FDA certification
• Chemicals with environmental impact
• Food products without FSSAI clearance
• Gold and precious stones (canalised through nominated agencies)
  

To import these, you may need:

• Advance Authorisation License from DGFT
• NOC from BIS, WPC, MOEF or FSSAI, depending on the product
• Test reports or certifications as part of the documentation
  

Regulatory Bodies for Product-Based Import Licenses

Some products must be registered or certified by specific government bodies before they can be imported into India. This ensures that all imported goods meet Indian safety, health, and environmental standards.

Product Licensing Table

Product Type	License / Registration Authority
Electronics	WPC (Wireless Planning & Coordination) and BIS (Bureau of Indian Standards)
Cosmetics & Food	CDSCO (Central Drugs Standard Control Organisation) and FSSAI (Food Safety and Standards Authority of India)
Medical Devices	CDSCO – Registration and import license required for most Class B, C, D devices
Chemicals	DGFT and MOEF (Ministry of Environment and Forests) – Especially for hazardous substances

Failing to obtain the correct product-based licenses or special import permits can result in shipment seizures, customs rejection, or financial penalties. Always verify your import category with DGFT or consult with a trade compliance expert.

Taxation and Accounting for Importers in India

Running a successful import business in India involves more than just logistics and compliance—it requires proper tax accounting and financial reporting. Handling import duties, GST, and foreign payments correctly helps you claim benefits and avoid penalties under Indian tax laws.

Import Duty Treatment in Accounting

Imported goods attract multiple duties—Basic Customs Duty (BCD), IGST, and Social Welfare Surcharge. These should be recorded in your books under:

• Purchase cost (for customs duty)
• Input GST ledger (for IGST) – eligible for credit
• Landed cost calculation – includes product price + duties + freight + insurance
  

All duties paid at the time of customs clearance are documented through the Bill of Entry, which should be retained for audit and GST reconciliation.

Claiming Input Tax Credit (ITC) on Imports

As an importer registered under GST, you can claim IGST paid on imports as Input Tax Credit and use it to offset your output tax liability.

To claim ITC:

• Ensure your GSTIN is mentioned on the Bill of Entry
• Match the IGST amount paid with your ICEGATE portal entries
• Reconcile this during monthly return filing in GSTR-3B
  

TDS/TCS on Foreign Payments

When paying overseas suppliers or service providers, you may be liable to:

• Deduct TDS under section 195 of the Income Tax Act
• Collect TCS under section 206C(1G) for foreign remittances beyond threshold
  

Rates depend on:

• Nature of payment (goods vs services)
• Whether DTAA (Double Taxation Avoidance Agreement) applies
• PAN availability of the recipient
  

Ensure your bank files Form 15CA/CB if required for foreign remittance.

Filing GST Returns for Importers

Importers must regularly file GST returns to report purchases, claim ITC, and comply with tax laws:

• GSTR-1 – Monthly details of outward supplies (if re-selling imported goods)
• GSTR-3B – Summary return where IGST paid on imports is claimed as ITC
  

Accurate recordkeeping and timely filing are crucial for avoiding notices and enjoying seamless credit flow

Tips to Grow and Scale Your Import Business in India

Once your import business in India is operational, the next step is to scale strategically. Growth in the import sector depends on smart sourcing, market positioning, and leveraging trade incentives. Below are key tips to expand your operations, reduce costs, and explore new markets—while staying compliant and competitive in 2025.

Explore Export Opportunities Alongside Imports

Consider dual registration as both an importer and exporter to:

• Re-export imported goods after value addition
• Tap into RoDTEP and SEIS export incentives
• Balance import costs with outbound trade profits
  

Apply for RCMC (Registration-Cum-Membership Certificate) with relevant export promotion councils like EEPC, CHEMEXCIL, or FIEO.

Set Up in SEZ or GIFT City for Tax and Operational Benefits

To scale your importing business in India while optimizing taxes and operations, consider establishing a unit in a Special Economic Zone (SEZ) or GIFT City (Gujarat International Finance Tec-City, IFSC). These hubs offer significant incentives tailored to export-oriented and financial businesses.

Benefits of Setting Up in an SEZ:

• Zero-Rated GST on Imports and Supplies: Goods and services supplied to SEZ units for authorized operations are exempt from Goods and Services Tax (GST) under the IGST Act, 2017, as SEZs are treated as outside India’s customs territory.
• Duty-Free Procurement of Inputs: SEZ units can import or procure raw materials, capital goods, and other inputs without customs or excise duties, provided they are used for approved activities.
• Streamlined Regulatory Framework: SEZs offer single-window clearance for approvals, simplified customs procedures, and exemptions from certain industrial licensing requirements, reducing bureaucratic hurdles.

Benefits of Setting Up in GIFT City (IFSC, Gujarat):

• Liberalized Foreign Exchange Regulations: GIFT City, India’s first IFSC, operates as a foreign jurisdiction for forex transactions, enabling easier cross-border financial flows under a relaxed Foreign Exchange Management Act (FEMA) framework. Note that full capital account convertibility is not available, as some RBI oversight remains.
• GST Exemption on Specific Services: Services between IFSC units, to SEZs, or to offshore clients are GST-free, lowering operational costs. Transactions on IFSC exchanges (e.g., securities trading) also incur no GST.
• Tax Concessions on Dividends and Other Levies: Dividends paid to non-residents by IFSC units are taxed at a concessional rate of 10% (plus surcharge and cess). Additionally, transactions on IFSC exchanges are exempt from Securities Transaction Tax (STT), Commodity Transaction Tax (CTT), and stamp duty, with state subsidies on rentals and utilities further reducing costs.

Why Choose SEZ or GIFT City for Importing?

SEZs are ideal for import-export businesses, offering duty-free inputs and GST exemptions that lower costs for sourcing materials. GIFT City suits businesses with global financial operations, providing tax-efficient structures and world-class infrastructure. However, consult tax professionals to navigate sunset clauses (e.g., SEZ tax holidays ended for new units post-April 2020) and ensure compliance with evolving regulations.