Confused about exporting from India to US as a UK company

Discussion in 'International Business' started by Roadrunner123, Aug 11, 2016.

  1. Roadrunner123

    Roadrunner123 UKBF Newcomer Free Member

    1 0
    Hello,

    I was wondering if anyone would be able to help with a question about a UK company sending products directly from India to the US.

    I run an accessories business based in the UK, and my business partner is based in India. She is in charge of the production in India, and she has been sending me products in the UK to sell on our website.

    We have just received interest from a US distributor, and we are planning on sending our products directly from India to the US.

    The problem is, the products aren't made in just one factory; the fabric is sourced from one place, the hardware is sourced from another, then it's all sewn together by a factory, and the factory does not export.

    We don't have a separate company in India, so my business partner may have to either obtain a private export license, or open a company there to be allowed to export.

    Ideally it would be best if we didn't have to open a company in India, because our company is based in the UK and we don't know what the tax complications would be to have the same company in two countries. We just want it to be a straightforward operation of me receiving orders in the UK, sending them to be manufactured in India and sent from India to the US, and the invoicing being done in the UK.

    My questions are:

    1. Does anyone have any experience with a similar situation and have any insight into what the best solution is?

    2. What is best for us as a UK company - for the US distributor to be paying in Pounds or Dollars? And how do Rupees figure into this?

    3. If I do have to send money to India to pay for production, because we aren't paying a factory directly, will it count as money laundering if I send funds to my business partner's bank account in India for her to pay for production?

    It would be great to hear your thoughts, thank you for your time
     
    Posted: Aug 11, 2016 By: Roadrunner123 Member since: Aug 11, 2016
    #1
  2. euphbasio

    euphbasio UKBF Newcomer Free Member

    5 2
    Hi,
    There are a few considerations here:

    1. If the factory (I assume a third party company) won't export, you will need someone in India to export the goods. India has export regulations and anyone exporting needs to comply - you would need a Business Identification Number and a local bank account to complete customs procedures to export the goods from India - there may be other formalities depending on the state, product, quantity etc. If you don't want to do this, find an export house or a trader that is already doing it and make a deal.

    2. Your best payment route would be to pay the factory directly from your UK company, unless you have a company in India. Most Indian companies will accept dollar and sterling payments. If they don't, there are services that you can use like Western Union (though this may not be best for larger repeat transactions) or third parties. Using personal accounts is not always problematic, but not advisable. A local company may be of use here. Never pay 100% advance unless you have guarantees to ensure quality and delivery.

    3. Most US businesses want only to deal in Dollars - the US is a difficult market to deal with because their requirements are very specific and not always up to date. Sell in dollars and make sure you are clear on your payment terms - it is not uncommon for US companies to pay by USD cheque, which can take 8-16 weeks to clear into your account. They do have wire transfer facilities (I know this sounds crazy, but decades of experience.....) so be firm and strict.

    4. The US will I assume be paying your UK company, and your UK co. will pay the Indians. The currencies shouldn't need to crossover (and you shouldn't need to handle rupees anyway).

    5. Be careful with your Indian export invoices - this could reveal cost pricing to your US distributor. Make sure they are not sent with the goods.

    6. Who will be arranging shipment? You or the US distributor? Be clear about the Incoterms you use to define who has responsibility and where risk and title passes. Most US companies want delivery duty paid service, so you could be exposed to US customs duties and taxes - make sure you know in advance so you can cost them in.

    7. If you wanted to bring the goods into the UK and re-export them, you could import them into the UK under Inward Processing Relief (IPR), which means you don't pay duty and VAT (or at least get it back). Simplified IPR allows you to do this easily for a few shipments, if it's regul, you would need to register which is a nightmare - the regulations and forms have been updated recently but don't match and the guidance is awful. Get some help from someone who has done it before if you want to look at this.

    This is all general stuff, without knowing a lot more about your operation. PM me if you want some more specific advice and information about specific rules/regs/procs etc.
     
    Posted: Aug 14, 2016 By: euphbasio Member since: Feb 19, 2015
    #2
  3. Lizzie Wennell

    Lizzie Wennell UKBF Newcomer Free Member

    4 0
    HI, this post came up when I searched for my query - I am finding it difficult to find a bank account that will pay my Indian factory in USD (I'm based in the UK). I want to avoid lots of fees and looked at transferwise, eve western union online and they both require I pay in rupee. This must be standard so I'm confused how I am having difficulty with this? Can you help?
     
    Posted: Sep 15, 2018 at 10:37 PM By: Lizzie Wennell Member since: Mar 7, 2018
    #3
  4. Lizzie Wennell

    Lizzie Wennell UKBF Newcomer Free Member

    4 0
    sorry that post was to the last replier...
     
    Posted: Sep 15, 2018 at 10:37 PM By: Lizzie Wennell Member since: Mar 7, 2018
    #4
  5. J Ali

    J Ali UKBF Contributor Full Member

    32 0
    You can open a NRB account with State Bank of India UK, they will then transfer it to a account in India for you to use how you want.
     
    Posted: Sep 16, 2018 at 11:56 AM By: J Ali Member since: Sep 12, 2018
    #5
  6. Lizzie Wennell

    Lizzie Wennell UKBF Newcomer Free Member

    4 0
    HI, what's an NRB account? Is this the only way (by setting up an Indian acc) surely there's a company in the UK that can do this? Thanks
     
    Posted: Sep 16, 2018 at 3:29 PM By: Lizzie Wennell Member since: Mar 7, 2018
    #6
  7. J Ali

    J Ali UKBF Contributor Full Member

    32 0
    Non Resident Business Account basically your account will be based in the UK but you can use it in India for paying and receiving payments in $, £ or Rupees
     
    Posted: Sep 16, 2018 at 3:49 PM By: J Ali Member since: Sep 12, 2018
    #7