Exporting from India: The Reality of Doing Business

The Indian government often highlights advancements in the ease of doing business. However, a frustrated entrepreneur’s recent post on Reddit starkly contradicts this narrative by showcasing the overwhelming bureaucratic challenges involved in B2C exports.

Ease of Doing Business vs Reality

In a post titled “Why you should not try exporting from India Vent & Rant,” Reddit user Limp-Question-4778 expressed his four-year struggle, stating that the talk about ease of doing business is merely words without action. He suggested that relocating to Dubai for exporting is more beneficial than attempting to export from India.

The entrepreneur, hailing from a small Indian village, initially found success in the domestic market, managing between 300-400 orders daily. His challenges began when he attempted to attract international customers in 2022. The intricate requirements he faced included securing an IEC Certificate, registering on ICEGATE, acquiring an AD code from the bank, and the necessity of shipping through licensed couriers. He described these processes as nonsensical for a mere $30 export.

Punished by GST Twice for a Rejected Shipment

To compound his issues, when a customer rejected a shipment, the Indian government imposed GST charges on him twice—once for the shipped goods and again for the return. He pointed out that they had to pay GST a second time on a shipment they derived no profit from, underscoring how punitive regulations weigh heavily on small businesses.

Complications further arose with the CSB 5 document, a required shipping bill that every exporter must keep. Due to the lack of proper integration among Customs, GST, and RBI systems, he found nearly ₹50 lakh worth of “open” shipping bills by 2024. Closing each bill incurred a fee of ₹400, adding up to ₹8 lakh—around 16% of his annual turnover. Struggling to meet an arduous deadline, the RBI deemed his account non-compliant, leading to its freeze and effectively putting an end to his exporting activities.

Silence from the Authorities Despite Repeated Appeals

Despite numerous attempts to seek help from regulatory bodies, the entrepreneur received no responses. He sent multiple letters to the RBI and even created detailed diagrams to illustrate his predicament for the office of Commerce Minister Piyush Goyal, yet silence remained the only response.

ITC Claims Trigger Bureaucratic Nightmares

Many small businesses shy away from claiming Input Tax Credit (ITC) due to the risk of triggering a GST audit, which can lead to harassment. The entrepreneur lamented that they simply lacked the funds, manpower, or endurance to tackle yet another bureaucratic nightmare.

India vs UK: A Stark Comparison

He also drew attention to the ridiculous bureaucratic hurdles in India by contrasting them with his experience establishing a business in the UK remotely. He stated that he could set up a UK-based company and bank account within two days, while it took him over two months to set up a company in India, even after attempted bribery.

The entrepreneur mourned the lost job opportunities for more than 50 rural women whose lives he had improved through his business. The forced shutdown due to bureaucratic obstacles meant these workers once again faced their previous struggles.