Handicraft & Handloom Export Approvals – Step-by-Step Registration Guide

The vibrant colours, intricate designs, and rich cultural heritage of Indian handicrafts and handlooms have captivated a global audience. For local artisans and small business owners, this translates into a massive opportunity to take their unique creations to international markets. However, the path to becoming a successful exporter is paved with regulations and paperwork. This detailed guide is designed to simplify that journey, providing you with all the necessary information on securing your handicraft export approvals. Navigating the legalities can seem daunting, but this comprehensive, step-by-step export guide India will break down the entire process into manageable actions, ensuring you are compliant and ready for global success.

Step 1: Laying the Foundation – Your Business Structure

Before you can think about shipping your first order, you need to establish a solid legal and financial foundation for your business. This initial step is crucial as it dictates your compliance requirements, personal liability, and ability to raise funds in the future. It’s the bedrock upon which your entire export venture will be built.

Choosing the Right Business Entity

The structure you choose for your business has long-term implications. For a deeper comparison, you can read our guide on Comparing Business Structures: Private Limited, LLP, OPC & More. For small exporters in India, there are a few common and practical options, each with its own set of pros and cons.

• Sole Proprietorship: This is the simplest and most common business structure for individual entrepreneurs. It’s easy to set up with minimal paperwork, as the business is legally indistinct from you, the owner. All profits and losses are your own, and compliance is relatively straightforward, making it an ideal choice for artisans and traders just starting their export journey.
• Partnership Firm: If you are starting the business with one or more partners, a Partnership Firm is a viable option. It allows for the pooling of capital and skills. A formal partnership deed should be drafted to outline the roles, responsibilities, and profit-sharing ratios of all partners to avoid future conflicts.
• Limited Liability Partnership (LLP) / Private Limited Company: As your business grows, you might want to consider structures that offer limited liability protection. An LLP combines the operational flexibility of a partnership with the benefit of limited liability, meaning your personal assets are protected from business debts. A Private Limited Company is a more formal structure, offering greater credibility and making it easier to attract funding and investment, though it comes with higher compliance costs.

Your choice of business entity is a strategic decision. Consider your long-term vision, capital requirements, and risk appetite before making a final call.

Essential Financial Prerequisites

Once your business structure is decided, two financial components are non-negotiable for entering the export market.

• Business PAN Card: The Permanent Account Number (PAN) is a unique ten-digit alphanumeric identifier issued by the Income Tax Department. For a proprietorship, your personal PAN can be used. However, for a partnership, LLP, or company, you must apply for a separate PAN card in the name of the business entity. This is a mandatory document for all financial and tax-related matters.
• Current Bank Account: All your export-import transactions must be routed through a dedicated business current account. You cannot use a personal savings account. To open a current account, banks will require proof of your business’s existence (like a registration certificate) and your business PAN card. This account is also a prerequisite for obtaining the crucial Importer-Exporter Code (IEC).

Step 2: Core Licenses for Your Export Journey

With your business structure and finances in place, the next stage involves acquiring the essential licenses that grant you legal permission to trade internationally. These are the gate passes to the global marketplace, and operating without them is not an option.

The Gateway to Global Trade: Importer-Exporter Code (IEC)

The Importer-Exporter Code (IEC) is arguably the most critical license for any export business. It is a unique 10-digit code issued by the Directorate General of Foreign Trade (DGFT), a body under the Ministry of Commerce and Industry. No export or import activity can be carried out from India without a valid IEC. It is a one-time registration with lifetime validity, meaning there are no renewal hassles. For a detailed walkthrough, see our guide on the DGFT IEC Code – How to Register for Import Export Business in India.

The application process is entirely online through the official DGFT portal. You will need to submit key documents to complete the application successfully.

Documents Needed for IEC Application:

• PAN card of the individual or the business entity.
• Proof of address for the business premises (e.g., utility bill, rent agreement).
• A cancelled cheque bearing the pre-printed name of the applicant entity and account number, or a bank certificate.

Obtaining your IEC is the very first and most significant step in the handloom export approvals process. You can begin your application on the official DGFT website.

GST Registration: Compliance and Benefits

Under the Goods and Services Tax (GST) regime, any business engaged in the inter-state supply of goods must register for GST, irrespective of its turnover. Our Ultimate Guide to GST Registration for Small Businesses can provide more detailed information on this process. Since exports are treated as “inter-state supplies,” GST registration is mandatory for anyone looking to sell their handicrafts or handlooms abroad. This is a key component of understanding the broader handicraft industry regulations India.

The primary advantage for exporters under GST is that exports are considered “zero-rated supplies.” This means that while GST is applicable, the effective tax rate on the final export product is zero. Exporters have two options to avail this benefit:

• Exporting with a Letter of Undertaking (LUT): An exporter can file a Letter of Undertaking (LUT) on the GST portal. This is a simple online declaration stating that you will fulfill all export obligations. Once your LUT is accepted, you can export goods without paying any IGST upfront, which greatly helps in managing your working capital.
• Exporting with IGST Payment: The alternative is to pay the applicable IGST on the goods you are exporting and then claim a full refund of the tax paid after the goods have been successfully exported. This route involves a temporary cash outflow but is a straightforward process.

You can manage all your GST-related compliance on the official GST Portal.

Step 3: Council Registrations and Product-Specific Compliance

After securing the foundational licenses, the next step is to align with specific bodies that govern and promote the export of your products. This ensures you have the right support system and meet the specific registration requirements for handicrafts.

Joining an Export Promotion Council (EPC)

Export Promotion Councils (EPCs) are government-recognized organizations that act as a bridge between the government and exporters. Their primary role is to promote and support Indian export businesses in specific sectors. To avail the benefits offered by these councils and certain government schemes, an exporter must become a member.

Upon registration, the council issues a Registration-cum-Membership Certificate (RCMC). This certificate is a crucial document that serves as proof of your registration with a council relevant to your products. It is often required during customs clearance and for availing export incentives.

For your business, you should register with one of the following nodal agencies:

• Export Promotion Council for Handicrafts (EPCH): This is the main body for a vast range of handicraft products, from home decor and textiles to fashion jewellery and furniture. They provide market insights, connect exporters with buyers, and organize trade fairs. You can find more details on the EPCH website.
• Handloom Export Promotion Council (HEPC): If your primary focus is on hand-woven textiles, fabrics, and home furnishings like sarees, shawls, and bed linens, the HEPC is the designated council for you. They play a vital role in promoting the rich tradition of Indian handlooms globally. More information is available on the HEPC website.

Joining the right council is a critical part of the handloom registration process India and unlocks a wealth of resources for your business.

Assembling Your Handloom Export Documentation India

For every shipment that leaves the country, a specific set of documents is required by customs authorities, shipping lines, and the importing country’s officials. Having this paperwork in order is non-negotiable for a smooth transit and delivery process.

Here is a checklist of the essential handloom export documentation India you’ll need for each consignment:

• Commercial Invoice & Packing List: The commercial invoice details the buyer, seller, goods description, quantity, value, and payment terms. The packing list provides details about the contents of each package, including weights and dimensions.
• Shipping Bill / Bill of Export: This is the primary customs document. It is filed with the customs department to get clearance for the export shipment. It is usually filed electronically through the ICEGATE portal.
• Bill of Lading / Airway Bill: This document is issued by the shipping company or airline as a receipt for the goods. It acts as a contract for the transportation of the goods and is a document of title, meaning the holder of the bill has the right to claim the goods.
• Certificate of Origin: This document certifies that the goods being exported were manufactured in India. It is often required by the importing country to determine tariff rates and admissibility.
• RCMC: A copy of your Registration-cum-Membership Certificate from the relevant EPC (EPCH or HEPC) is often required as proof of your registration.

Your Final Checklist for Handicraft Export Approvals

The process can feel like a lot to take in at once. Here is a simplified checklist to help you track your progress as you secure all the necessary handicraft export approvals.

• ☐ Finalize Business Structure (e.g., Sole Proprietorship, LLP).
• ☐ Obtain Business PAN and open a Current Bank Account.
• ☐ Apply for the Importer-Exporter Code (IEC) from DGFT.
• ☐ Complete your GST Registration.
• ☐ File a Letter of Undertaking (LUT) for tax-free exports.
• ☐ Obtain an RCMC from the relevant Export Promotion Council (EPCH/HEPC).
• ☐ Prepare the standard set of export documents for your first shipment.

Conclusion

Taking your authentic Indian handicrafts and handlooms to the world is an exciting venture filled with immense potential. While the process involves several steps—from setting up your business and getting an IEC to registering with GST and an Export Promotion Council—following this systematic approach ensures you build a compliant and sustainable export business. By methodically securing these handicraft export approvals, you are not just completing paperwork; you are opening the doors to a global marketplace eager for your unique products.

Navigating the handicraft exports India guide can be challenging. Let TaxRobo’s experts handle all your registrations and compliance, so you can focus on your craft. Contact us today for a hassle-free consultation!

Frequently Asked Questions (FAQs)

Q1: Is an Importer-Exporter Code (IEC) mandatory for exporting handicrafts?

A: Yes, absolutely. The Importer-Exporter Code (IEC) is a mandatory 10-digit code required for any individual or company to undertake export or import activities in India. Without it, you cannot legally ship goods out of the country for commercial purposes.

Q2: Can I export without GST registration?

A: No. GST registration is mandatory for all exporters. This is because exports are treated as zero-rated supplies, and to claim the benefits of this provision (either exporting without tax under an LUT or claiming a refund on IGST paid), you must be registered under GST.

Q3: What is the main difference between EPCH and HEPC?

A: The main difference lies in the product category. EPCH (Export Promotion Council for Handicrafts) is the nodal agency for a broad spectrum of craft items, including woodcraft, metalware, textiles, and fashion accessories. HEPC (Handloom Export Promotion Council), on the other hand, is specifically for hand-woven textiles and products like sarees, dhotis, and handloom fabrics. You should join the council that best represents your primary products.

Q4: How long does it typically take to get all the necessary handicraft export approvals?

A: The timeline can vary depending on the efficiency of the application process. Generally, an IEC and GSTIN can be obtained within 7-10 working days. An RCMC from an export council may take a bit longer, around 2-3 weeks. It’s always advisable to start the process of getting your handicraft export approvals well in advance of your first planned shipment to avoid any last-minute delays.