Certifications Required to Export Handicrafts to the US
The revenue numbers of the Indian handicrafts are growing exponentially in the global market. Research studies have indicated that these numbers will keep rising in the coming years. The Indian handicraft industry as we all know is a labor-intensive sector employing about 70 lakh artisans. Owing to this fact, the production cost of handicrafts in India is low as compared to other countries. Raw materials are also easily available across various parts of the country to produce handicrafts. Thus, we can see that there are many opportunities that this industry can provide to us. Exporting handicrafts from India can be an extremely profitable business if carried out properly, keeping in mind the necessary nuances of this sector and the market. When it comes to the export of handicrafts, the US is one of the very first countries that comes to our mind. This is because of various reasons. The US is a developed country with a high rate of per capita income. Handicraft lovers in America have a high disposable income with themselves that they like to spend on these beautiful pieces of arts and crafts. The US market constitutes around 25-30% of the total handicraft exports of India. This shows the immense potential that the US market has for Indian handicrafts. If you have planned to export Indian handicrafts to the US, there are a number of things that you must keep in mind, certifications being the most important of the lot. Without the necessary certifications, you cannot move a set forward. Follow this complete guide to learn about the different certifications required to export handicrafts to the US. Apart from discussing the certifications, we will also go through the necessary points that can help you become a successful exporter of Indian handicrafts.
Table of Contents
- An Overview of the Top Categories of Handicrafts Along with Key Global Markets
- List of Certifications Required to Export Handicrafts to the US
- Business Organisation Registration
- Permanent Account Number
- Import Export Certificate
- Goods and Service Tax (GST) Registration
- Registration With Export Promotion Council for Handicrafts
- Registration With Export Credit Guarantee Corporation Limited
- List of Documents You Will Require to Export Indian Handicrafts to the US
An Overview of the Top Categories of Handicrafts Along with Key Global Markets
In the financial year 2021, the export number of the various categories of handicrafts stood as following:
- Woodwares contributed around the US $ 850 million
- Embroidered and crocheted goods contributed around the US $ 605 million
- Art metal wares contributed around the US $ 470 million
- Hand Printed textiles and scarves contributed around the US $ 340 million
- Imitation jewelry contributed around the US $ 187 million
- Miscellaneous handicrafts contributed around the US $ 827 million.
Indian handicrafts were exported to the majority of the countries in the financial year 2021. However, the countries that topped the chart for the import of Indian handicrafts are the US, United Kingdom, United Arab Emirates, France, Germany, Italy, Netherlands, Canada, Australia, and the Latin American Countries.
List of Certifications Required to Export Handicrafts to the US
There are a number of certifications that you need to obtain for the export of handicrafts from India to the US. Let us now discuss these certifications in detail:
Business Organisation Registration
It is mandatory to register in any of the business organisations if one intends to engage with EXIM. There are different forms of business organisations that can come into existence as per the legal framework of our country. The list of various business organisations are as follows:
- Public Limited Company
- Private Limited Company
- One Person Company
- Partnership firm
- Sole Proprietorship
- Limited Liability Partnership
- Nidhi Company
- Section 8 Companies ( meant for not-for-profit organisations)
An exporter should keep in mind various factors before choosing any form of business organisations. Business organisations like public limited companies and private limited companies are formed usually when the export business is of a large scale. One needs to comply with many legal formalities pre and post-incorporation in business organisations like a public limited company, private limited, company, and one-person company. If the number of members involved is very small and the operation of the business is also on the lower side, one can opt for business organisations like partnership firms and limited liability partnerships. For registering a partnership firm or a limited liability partnership, you need to fill up an electric form called SPICe which is available on MCA’s website.
Permanent Account Number
Any exporter needs to mandatorily obtain a Permanent Account Number ( PAN) to start the process of exporting. Exporters generate income from various activities of exporting that attract various types of exemptions and deductions under the different sections of the Income Tax Act. To get the benefit of these exemptions and deductions, exporters and export houses need to register themselves with the Income Tax Department and obtain a PAN card. Without a PAN card, you cannot obtain documents like IEC.
Import Export Certificate
The Importer Exporter Code (IEC) number is a legal document that is necessary for all the importers and exporters in India. It is mandatory to obtain the Import Export Certificate according to the Foreign Trade Policy. You can easily obtain this certificate by visiting the DGFT website with a prior filled e-form along with the registration charges. An important thing that should be kept in mind before filing this form is that you must have a bank account in the name of your business organisation.
Goods and Services Tax (GST) Registration
Different exportable goods do not attract Central Sales Tax and Value Added Tax if the exporters or the export houses have proper VAT registration and if they obtain exemptions according to the respective acts. With effect from 2017, GST registration for exporters and export houses has been made mandatory by the Government of India.
Registration With Export Promotion Council for Handicrafts
It is very important for exporters to register themselves with the Export Promotion Council for Handicrafts and obtain the Registration Cum Membership Certificate (RCMC). By availing of this membership certificate, an exporter can derive the benefits provided by the EPCH. Exporters can obtain RCMC from the concerned EPCs/ FIEO / Commodity Boards. At present, we have 21 EPCs in our country who work for the development of Indian handicrafts.
Registration With Export Credit Guarantee Corporation Limited
International transactions involve a lot of risks owing to the political and the commercial factors of the respective country in which you’re exporting the handicrafts. You can avert or minimise these risks by taking a policy from the Export Credit Guarantee Corporation Limited. By registering yourself with this institution, you can also get fiscal support from different commercial banks outside.
List of Documents You Will Require to Export Indian Handicrafts to the US
- Proforma Invoice and customs packing list required during the quality check of handicrafts
- Country of Origin Certificate
- Shipping Bill
- Commercial Invoice
- Bill of Sight
- Bill of Exchange
- Bill of Lading
- Letter of Credit
- Import Export Licence
- Warehouse Receipt only if ICD is involved.
As per the Foreign Trade Policy 2015-2020, mandatory documents required to import or export handicrafts are a bill of lading, commercial invoice cum packing list, and shipping bill/bill of export. Other documents that are mentioned below may be required as per the respective cases. You can also check the necessities and requirements of federal agencies of the US to avoid any problems while exporting handicrafts.
How Craftezy Helps you in Exporting Your Handicrafts to Global Market?
Craftezy is an online handicraft trade platform that aims to digitize the entire process of buying and selling handicrafts for traders across the globe. This gives the seller a competitive advantage. It can reduce your costs drastically. Craftezy can provide your products global visibility by attracting a global crowd which is very tough if you go through the route of building your own website. It is a handicraft trade platform based in India that can help you in each and every step of your business. Right from listing your products, managing your catalogs to carrying out negotiation processes with the buyers, Craftezy’s team will be with you. Now you can easily make profits through India’s trusted handicrafts B2B marketplace and become a successful exporter.
The Covid Pandemic had impacted the handicraft industry a lot. However, recent trends indicate that the export numbers of the various segments of the Indian handicrafts have shown exponential growth in the fiscal year 2021. Various indicators have also suggested that the numbers of this industry will keep on increasing in the years to come. The Government of India has worked to promote the welfare of this industry by introducing a number of schemes. These schemes and programs have helped in the boosting of production across the rural and the urban parts along with incentivizing the workmanship of the artisans across the country. Since India is recovering swiftly after being hit by the Corona pandemic, it is probably one of the best times for newcomers to engage in this flourishing industry in the form of exporters.
If you want to succeed in the exports of Indian handicrafts, grasping the right opportunities at the right time is very important for you. In this digital era, it has become mandatory that your business should be on the internet. Now, instead of taking the conventional route and building your own website to display your products and sell them to art lovers across the globe, you can opt to take the help of Craftezy.