How To Start a Plastic Export Business? – Business Plan Sample
The plastic industry is growing by leaps and bounds. The material has a large number of uses in different spheres. The per capita consumption of plastic is only increasing. This is bad news for our environment; hence more and more industries are looking into eco-friendly plastic. But plastic as an individual component or raw material is a vital part for a large number of industries and hence is an important commodity.
The Plastic Industry in India is Booming
With factors like “environmentally friendly” and “biodegradable”, this is only pushing business people in the trade to improve their technology and bring on innovative solutions for the plastic industry. The immense potential has motivated business owners to invest in research and development and come up with unique solutions. India is one of the most promising exporters of plastics among developing countries.
The Indian plastics industry produces and exports a wide range of raw materials, plastic molded extruded goods, polyester films, laminates, molded/soft luggage items, writing instruments, plastic woven sacks and bags, PVC leather cloth and sheeting, packaging, consumer goods, sanitary fittings, electrical accessories, laboratory/ medical-surgical ware, and travel ware, among other products.
How to Export?
The first and foremost thing to do would be to get an import-export code through your regional authority. The next step would be to register the dock through which you will import/export. This is the standard procedure though. You would want the give accurate information when it comes to the kind of plastic product you are exporting, the color of the product, the packaging and wrapping of products, etc.
Also, you might be asked if there are any contaminations and the degree of contamination if any. The quantity of plastic and its origin should be stated clearly. Remember, when you export to a particular seller, the freight charges are also included. So, consider your pricing accordingly. If you are including the transport charges separately, indicate it clearly.
The Letter of Credit (L/C) is an important aspect of the exporting business. It is written by the buyer’s bank to the seller; this guarantees payment if done appropriately. The following are the steps:
- The buyer and seller agree on terms and conditions including price, quality, transportation, shipment, and cover/insurance.
- The buyer applies to the issuing bank for the L/C.
- The issuing bank* sends the L/C to the advising bank in the seller’s country.
- The advising bank’s** then verifies the authenticity of /LC. It then informs the seller of the L/C.
- The seller is advised of the L/C and receives a copy, he or she should study it carefully to make sure that each of its terms and conditions can be met and that there is no discrepancy.
- The seller ships the goods assemble the required documentation. The seller makes sure that these documents conform exactly to all the terms and conditions set down in the letter of credit.
- The seller presents the documents to the advising bank which checks the documents and, if they are in order, pays the seller immediately. The documents are then sent on to the issuing bank.
- The issuing bank checks them again and, if they are in order, the issuing bank will pay the advising bank and pass the documents to the applicant (buyer) who uses the documents to receive the goods from the carrier.
It is clear that the plastic industry in India will only continue to grow. However, in the next few years, fierce completion is expected. The only way to face and survive the competition is through innovation and adopt radically new methods to cut costs and improve performance.
*An Issuing Bank (Also known as an opening bank) is the Buyer’s or importer’s bank which establishes an LC in favor of a beneficiary (exporter), forwards it to an advising bank for delivery to the beneficiary, and commits itself to honor demand drafts drawn by the beneficiary against the amount specified in the L/C. (Source: www.businessdictionary.com)
**An advising bank (also known as a notifying bank) advises a beneficiary (exporter) that a letter of credit opened by an issuing bank for an applicant (importer) is available. Advising Bank’s responsibility is to authenticate the letter of credit issued by the issuer to avoid fraud. The advising bank is usually located in the beneficiary’s country. (Source: wiki)
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