Starting a Garment Export House

Export means selling goods from our country to any other country. Import means buying goods into our country from any other country. They are both important in deciding the economic status of the country. The country will flourish if the exports can be improved and the imports minimised. Balance of trade represents a difference in value of export and import for a country. Trade deficit occurs when imports are large relative to the exports. Imports are impacted principally by country's income and its productive resources. 

Process of Foreign Trade Transaction

In India, different type of export organisations are functioning; e.g. Merchant Exporter, Manufacturer Exporter, Star Export Houses, Trading Houses, Star Trading Houses, Canalising Agencies, State Export Corporations, Export Consortia, Government Public Sector Trading Organisation etc. 

An export house is defined as a registered exporter holding a valid export house certificate issued by The Director General of Foreign Trade of India. 

1. The primary requirement before setting up the export house is to clear the legal formalities:

·  Open an account in the name of the company with a commercial bank authorized to deal in foreign exchange.

·    Registration with regional licensing authorities (obtaining IEC number)- one cannot import/export goods without a valid IEC number.

·   Register with the AEPC (Apparel Export Promotion Council) to obtain benefits under the export-import policy.

·   Register with sales tax authorities

·   Register with excise authorities.

· Set up a technically and legally sound documentation department for preparing export documents, shipping and customs clearance of the goods, submitting documents to bank for purchase/collection/negotiation under L/C…etc.

2. The second thing that one needs before starting the export house is to decide the kind of merchandise that you intend making as rest of the planning and requirements depends on this. It should be clearly defined as to whether the goods made would be of knitted or woven nature/construction.
3. Once the nature of the goods is decided next step is to decide the target age / sex group i.e. the goods made would be for ladies/gents/kids/home-furnishings. Also the target international market should be decided as each market area has different specifications; e.g. for the US the goods have to be metal free so the need for a metal/needle detection machine arises.
4. Then is the most important requirement “the place” where the unit would be set-up. If the place has yet to be finalized then the following details could be considered:
• Availability of raw material.
• Availability of labour (skilled/semi-skilled/unskilled).
• Distance of the unit from the buyer warehouse/ port of loading (sea or air).
• Tax exemptions available, if any. (Export promotion zones)
• Availability of power supply.

It is very important that one of the above first three requirements must be in your favour so as to minimize your initial investment costs at each stage.

5. The area of the unit can either be utilizing efficiently the available area or based on the requirement finding appropriate area.
6. To calculate the investment in the area and infrastructure (machinery and man-power) requirement it should be decided what all manufacturing/finishing/packing processes would be conducted in-house and what all would be out-sourced.
7. Part of the processes could be out-sourced, like the finishing and packing. If incase this is required to be in-house not only does it increase the cost of procuring finishing machines but also requires space for finishing area and to accommodate the boiler for the steam presses/flat bed press etc and proper waste disposal after washing. The permission to set up the boiler is also required depending on the location and the rules and regulations prevalent in the area. In some areas is important to treat the waste water before disposing it. It’s thus advisable to out-source the same.
8. It has to be decided how much fabric / accessories are to be stored at a time. This decides the amount of area and the kind of storage space required for the same and also the amount of money that would be blocked.
9. Decide the cutting room size and capacity. For this the type of goods made is the deciding factor, whether any specialized cutting machines are required. Also the type of machinery has to be decided. If only straight knife or round knife cutting machines are to be used then the area calculation would consider the cutting table dimensions, free space for movement and place to store fabric rolls yet to be cut and the area for bundling and ticketing and hence storing the bundles before they are issued to the sewing department. Fusing machines generally form a part of this area. Again the size / type of fusing machine depend on the goods made. Proper light supply over the cutting table and the cutting table height are of utmost importance for obtaining high precision in cutting.
10. To decide the layout and infrastructure requirement of the sewing room/department it is important to decide the kind of manufacturing process that would be adopted, i.e. lines would be set up or modular manufacturing system. The kind of machinery would be dependable on the kind of goods made, e.g. for knitted garments more of over lock and flat lock machines would be required and less of lock stitch machines, while opposite holds true in case on woven. One each of button holing and button attachment machine is mostly sufficient unless the unit specializes in men’s shirts. It is important to decide the how many specialized machines would you like to invest in depending on the utility, otherwise they can be hired on need be to reduce the investment cost and save place that they would occupy when not in use.
11. If incase the finishing is to be in-house then one needs the washing machine, hydro extractor, dryer, ironing tables, spotting table, packing area and final packaging area. Depending on the buyer specification a strapping machine may also be required.
12. After the goods have been packed and packaged as per the buyer requirements space is required to store the cartons before they are sent to buyer warehouse or the customs area or port of loading.

Personnel requirement

1. HR Department :– HR manager and an assistant
2. Marketing Department :– 1-2 executives
3. Merchandising Department: - Team of senior merchandiser, merchandiser and junior merchants; depending on the amount of clientele. Generally one senior merchant can have 3-4 merchandisers under him.
4. Accounts Department: - At least 2 qualified accountants; 1 for the domestic and the other to handle international account formalities.
5. Documentation Department: - People to be recruited here should be well versed with domestic laws as well as laws and procedures of import and export in India and in the importing country. The personnel in this department should be well versed with interpreting the L/C and preparing the export documents.
6. Sampling department: - Designer, sampling coordinator, Pattern master.
7. Industrial engineering department: - APMM / GMT graduates, Mechanical engineers, mechanics and maintenance personnel, electrician.
8. Stores: - Qualified Textile engineer as the fabric store head and separate in charge of the accessories department. There should be different individuals to place orders and those to maintain stocks.
9. Cutting department: - Cutting head, bundling in charge, person to maintain the inward and out ward record/ cutting records.
10. Sewing department: - Production manager, line supervisors, operators.
11. Quality control department: - Chief QC, Checkers.
12. Packing department: - Personnel for ironing, spotting, packing, packaging.
13. Dispatch department: - Personnel to finally pack the goods as per buyer specification into cartons, do carton markings and keep record of the same and finally to load into containers

{Helpers are to be added to each department depending on the requirement. Also the cleaners to keep the premises clean and the security guards.}