Forwarding Success – Set Up a Shipping or Logistics Business in India
Looking to set up a shipping or logistics business in India? 3E Accounting provides a few simple steps to get moving.
Shipping and logistics are big business in India. This sector employs over fifty million people and accounts for almost three-quarters of trade value. As the 16th largest maritime country in the world, India has 12 major ports. Total Foreign Direct Investment (FDI) has been estimated at approximately three billion USD and is targeted to grow. Here’s how to set up a shipping or logistics business in India for a successful venture.
A simple understanding of shipping and logistics is that goods or services need to be stored or moved. Of course, the business itself is much more complex and in modern times encompasses supply chain management. This involves controlling and implementing multifaceted business management plans at every stage.
To get started with a shipping or logistic business in India, you will need to register your company with the Ministry of Corporate Affairs or MCA. The company type can be a:
- Private Limited Company
- Limited Liability Partnership
- Partnership Firm
- One Person Company
Once you receive your Certificate of Incorporation, you will need to apply for the relevant tax registrations, which include VAT, GST and service tax. You will also need to register for the Employee State Insurance or ESI.
Due to the international nature of the business, you will also need an importer-exporter Code (IEC). This is obtained by registering with the Directorate General of Foreign Trade (DGFT). This website also documents goods that are prohibited or restricted in India.
It helps to know about the logistics models that are popular in India. These include:
- Third-Party Logistics (3PL) – involves one or more outsourced logistics-related services. It can include shipping, storage or transportation, etc. It can also include systemwide services handling the entire supply chain management.
- Air Cargo Service – this is the movement of goods by the air carrier. The air carrier can be commercial or chartered.
- Courier & Freight Cargo Service – this includes goods such as letters to containers. Logistics can be via trucks to motorbikes to ships and aircraft.
- Warehousing Service – storage of goods to be sold or distributed at a later date, usually after customs inspection and clearance.
Which type of model you choose will have an impact on funding. Warehousing, for example, will need a more capital-intensive financial plan than courier service. Each type of business model will also require specific accreditations, especially ISO certifications. Others include:
- Supply Chain Certification
- International Air Transport Association (IATA)
- Air Cargo Agent Association of India (ACAAI)
It is prudent to get business insurance, especially in this industry. There are multiple variables involved at any point in a logistics business. The risk of cargo loss or damage and personnel injury, amongst others, is very high. Good insurance coverage is a must in sound risk management practice.
Moving Towards Success
Setting up a shipping or logistics business in India may seem intimidating. There are many steps to follow, and a lot of regulations to comply with. 3E Accounting has the requisite industry experience to ensure that your business registration process is seamless and smooth. As reliable industry partners, 3E Accounting’s suite of business solutions is all you will need.
Contact 3E Accounting today to get a move on your business endeavour.