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Issues Face In Import Export Business

What are some Common Issues that Import Export Companies Face?

  • Import Export Business
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  • Shivam Thakor

A business entity that deals in exchanging goods internationally are called an export-import business. These concerns buy commodities from the international market for consumption by domestic households. Similarly, an import business trades goods and services of local origin to the international market. An import export business does not always require much financial investment. Moreover, it gains the prestige of dealing with and having clients from all over the world. Conducting an import export business does not call for previous experience. However, for being a successful import-export concern, it has to pay attention to some minute details.

Steps of Commencing an Import Export Business

There are certain specific steps that every import export business has to follow before entering.

  • Buyers identify any products by the name of the brand. Therefore, deciding on a unique name for your business is very important. A unique name provides the customers a vibe for remembering the brand and differentiating from others. After that, the brand name has to be secured by registering it. Any company‚Äôs name is registered under the Companies Act 2013. The trademark of the brand is also registered along with the logo.
  • After registering the brand name, you have to deal with several legal matters. First, you have to get a PAN card issued from the Income Tax Department. After that, a current account should be opened in a commercial bank. Another very important legal matter that has to be procured is IEC registration. The Import Export Code registration can be gained from the Directorate General of Foreign Trade (DGFT).
  • After IEC any new import export business has to procure RCMC.

With these three basic steps, a new business concern can commence its import-export job. The whole matter takes about seven to ten days to complete.

Issues that Import Export Companies Face

Other than all different forms of business, an import export business is quite a tough racket. Issues like supply chain problems, border holdups, cultural issues, and different other difficulties are common. At present, with the pandemic scenario, this business witnessed even more hassles and added responsibilities. Following are some common issues that every import-export business faces while trading.

  • Financing: Manufacturing products along with outsourcing them abroad is not a cheap job. Even any trials and test runs are highly expensive. Therefore, for the main production, a huge amount of capital is required. Hence, to maintain the liquidity having a business loan is necessary. A newly commenced business always cannot the cost a bank loan. Other than banks, private lenders also offer monetary help. Private loans come with easy access to money but along with unsecured access.
  • Supply Chain: From manufacturing the product to reaching it to the customers, several middlemen are included. There is a high chance of going things wrong because of these multiple involvements. For example, while packing, the dockworkers can do something wrong. Again, mistaking in allotting barcodes in the warehouse would lead to a huge mess in shipping delays. It might always not be possible for being proactive and deal with these yourself. Irrespective of taking intense care some supply chain issues are still unpredictable. In this scenario, extra time is consumed for making a second arrangement.
  • Foreign Policy: rules and regulations regarding import and export change regularly. This is true for domestic as well as international circumstances. Therefore, shipments made internationally face changes in norms very frequently. Hence the shipments face delays in processing or might get seized in the worst case. Eventually, the business suffers losses, unsatisfied customers, and even lose shipments.
  • Customs and Culture: Business policies and life in different countries are different. In many countries, punctuality is paid the most important attention. Whereas, in some countries, the deadlines are met through a lot of difficulties. These issues stand in between the import-export businesses and can jeopardize the whole deal.

Common Pitfalls involved in Import-Export Business

Trading in the international market is not easy. And therefore, people are found facing troubles and difficulties in conducting these businesses. As discussed above the dynamic characteristics of the customs rules and regulations leads to some common mistakes. Without proper planning and strong homework, import-export business is not possible. Following are some common areas where glitches generally occur.

  1. Not Checking the Legitimacy of Buyer/Seller: Several newly emerged manufacturers and traders face trouble for certain little things. It is noticed that they do not pay attention to the reliability of the seller or buyer. This leads to risking the total foreign dealing and results in an immense loss. Different fake companies operating in the international market use fake company profiles. Therefore, understanding the party using government officials is important.
  2. Country Regulations: Another mistake that most import export companies commit is a nonchalant attitude towards country rules. Many exporters think they can export anything they want to any country. Whereas, in the import-export industry, there are several norms for exporting certain items to different countries. There are restrictions on a few products which can get seized at customs if rejected. Understanding these rules and norms are very important for avoiding losses in business.
  3. Less Knowledge about Import-Export: The newly emerged companies commonly believe that supplying goods internally is easy. But it is not always true. Many items can get trapped and result in incurring huge losses to the business. This happens when the company lacks information and knowledge regarding knowledge in imports and export. It is important to comply with terms set by the International Chamber of Commerce. This would help in conducting any international deal smoothly with less chance of risks. It also helps in enjoying a high-profit margin and timely delivery.
  4. Less Knowledge about Exchange Rates: Having a proper and in-depth idea of exchange rates is very important for the import-export business. Without the knowledge of exchange rates, you would be exposed to potential currency fluctuations. After a certain level, you would be restricted from moving ahead. Not only this you would be unable to lock the best price for attaining the optimum profit level. Consulting with professionals is always the best way out in these situations. Your banker can help you with information and suggestions regarding locking your profit. It would also give you protection from risk exposure.
  5. Inferior Relationship with Custom Officials: Having a poor relationship with the customs official is another pitfall in the import-export business. Keeping good terms with customs brokers, transportation folks and customs officials would help you in critical moments. In most cases, it is seen that importers and exporters behave as if they know more than the officials. This attitude not only deteriorates the relationship with them but also brings trouble. The companies are responsible to comply with all the norms of export and import. Therefore, it is a must to listen to them. Cooperating with the customs official is important even after hiring any private firm for conducting export and import.
  6. Neglecting Incoterms: The short form for International Commercial Terms is called Incoterms. It is an easy means of communication in import-export business as set by the International Chamber of Commerce. The simplified communicating terms help in making import and export smooth. The incoterms are nothing but abbreviations of several phases. For example, EXW for ex-works, FOB for free on board, FCA for free carriers, etc. Neglecting these terms can lead to wrong information in crucial times. This eventually leads to harassment, delay in delivery, and loss of money.
  7. Insurance of Supplied Goods: Safety is one of the most essential factors that every import-export company should take care of. But many small concerns do not look after this matter much. While shipping, the consignments can go through different rough patches. It can result in damaging the goods. Insurance of the goods supplied or exported is necessary. The insurance is done either by the seller or the transportation authority. Securing the goods are also necessary for easy and smooth documentation at the customs. Avoiding this step involves enormous loss along with capital.
  8. Bribe: Most small concerns overlook several norms of import and export. This leads to delays and holding back the consignment at customs. In this situation, many import-export business concerns try to bribe the customs officials for the release. Bribing at international borders complicates the situation even more and creates a disturbance. It is highly necessary to go through the norms against any corrupt practices to avoid bribery disputes.

Other than these points several other issues stand between a successful dealing. For example, failing to pack precisely and properly. Wrong labeling and marking can create confusion while documentation at the port. Also, different linguistic problems create a barrier to at arriving the consignment. The exporter should be also quite aware of the laws of the country where he is entering. In case of any confusion consulting with the transportation, a specialist is highly recommended.


An import-export business is very lucrative. This business idea comes with nominal capital investment. For making this business idea successful, you have to materialize and execute it properly. The import-export business always stands as a proud act for the country. It always welcomes new avenues for the business and also for the country. However, taking professional help for decision-making in this business is very crucial. It saves you from any wrong decisions and keeps you updated with international laws.

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