What is a merchant exporter? It files the export papers, but the maker backs the origin claim
India's Foreign Trade Policy defines a merchant exporter by trading activity: in practice it exports goods others made. It files the export and origin paperwork, but the maker supplies the evidence a UK duty claim rests on.
On this page
- What is a merchant exporter?
- What is the difference between a merchant exporter and a manufacturer exporter?
- What registrations does a merchant exporter in India need, and which incentives apply?
- How does a UK order work through a merchant exporter?
- Does the Indian maker have to deal with customs?
- What does a maker still provide when a merchant exporter ships?
- Can a merchant exporter sell goods made in China to the UK as Indian?
- Why does the UK buyer care where the goods were made?
- What happens if HMRC checks a CETA origin claim?
- Should a maker export directly or sell through a merchant exporter?
- Questions exporters ask
- Sources
At a glance
- GST on a sale to a registered exporter, if every condition is met
- 0.1%
- Time from the maker's invoice to export, or the 0.1% GST rate is lost
- 90 days
- How long Indian exporters and producers keep CETA origin records
- 5 years
- Window for HMRC to ask India to verify a CETA claim, after asking the importer
- 2 years
Bottom line: A merchant exporter takes the export and origin paperwork off the maker's desk, but not the evidence behind it. If the goods are not made in India, or the maker cannot show how they were made, the UK buyer's 0% duty claim can be denied.
In short
- FTP 2023 para 11.33 defines a merchant exporter as a person engaged in trading activity and exporting or intending to export goods. Like any exporter, it needs its own IEC.
- On a UK order the merchant exporter files the shipping bill and provides the UK-India CETA proof of origin. The UK importer of record or its UK-established agent makes the UK declaration.
- An RCMC is needed to buy at 0.1% GST and for FTP benefits on consignments above ₹3 lakh FOB, but not for RoDTEP, RoSCTL or drawback.
- The maker files no customs declaration, but it still owes a GST invoice, written origin information on its inputs and process, and any test reports the buyer needs.
- If HMRC questions a CETA claim, India's authority can question or visit the producer as well as the exporter, so the maker's records matter.
- Goods bought in China and only repacked, labelled or simply assembled in India are not Indian origin and cannot claim CETA preference.
What is a merchant exporter?
India's Foreign Trade Policy 2023 (FTP) defines a merchant exporter as "a person engaged in trading activity and exporting or intending to export goods" (para 11.33). In plain terms, it buys goods from a farm, workshop or factory and sells them abroad in its own name. It does not have to make anything.
The same chapter defines an exporter as a person who exports or intends to export and holds an IEC number, unless specifically exempted (para 11.21). So a merchant exporter is an exporter in its own right, with its own Importer Exporter Code (IEC): the same 10-character number as its PAN (para 2.05).
Two nearby terms cause confusion:
- Manufacturer exporter: a person who exports goods it has made, or intends to (para 11.32).
- Supporting manufacturer: a maker producing goods or components for a merchant or manufacturer exporter under a specific Authorisation, such as an Advance Authorisation (para 11.59(a)). It is not a label for every supplier.
What is the difference between a merchant exporter and a manufacturer exporter?
Both need an IEC, and for both the export is zero-rated for GST. They differ on registrations such as the Registration-cum-Membership Certificate (RCMC), the GST paid when buying, and who answers for origin under the UK-India Comprehensive Economic and Trade Agreement (CETA).
| Point | Merchant exporter | Manufacturer exporter |
|---|---|---|
| FTP definition | Trades in and exports goods (para 11.33) | Exports goods it made (para 11.32) |
| IEC | Required, in its own name | Required, in its own name |
| RCMC | Needed to buy at 0.1% GST or for FTP benefits above ₹3 lakh FOB; from the council for its main line, or FIEO | Same rule, plus evidence of manufacture to register as a manufacturer exporter |
| APEDA RCMC papers | Signed copy of the IEC | IEC plus proof of manufacture, such as FSSAI or Udyam registration |
| FSSAI (food) | Central Licence (category Trader/Merchant-Exporter), ₹7,500 a year | Central Licence (category Exporter-Manufacturer), ₹7,500 a year; makers also selling in India pick a manufacturing category too |
| Buying the goods | 0.1% GST possible if every condition is met | Normal GST on inputs |
| CETA origin declaration | Signs as exporter, may rely on the producer's information | Signs as producer or exporter, on its own information |
| Main origin risk | Answers for goods it did not make | Holds its own production records |
The FTP also allows third-party exports, where one exporter or manufacturer exports on behalf of another (paras 11.61 and 2.42). The shipping bill then shows both names, and the export order, invoice and e-BRC are in the third-party exporter's name.
What registrations does a merchant exporter in India need, and which incentives apply?
A merchant exporter needs the same core registrations as any exporter, plus an RCMC or product registrations where a rule asks for one.
Buying at 0.1% GST. A registered supplier may charge 0.1% GST on goods sold for export if the buyer is registered with an export promotion council or commodity board and exports within 90 days of the supplier's invoice, among other conditions. Details are in the merchant exporter GST rate guide.
RoDTEP and drawback. RoDTEP (Remission of Duties and Taxes on Exported Products) is granted to eligible exporters as a percentage of FOB value, and merchant exporters are not an excluded category (FTP paras 4.54 and 4.55). DGFT Notification 41/2026-27 continued it to 31 December 2026 with rates unchanged. Garments and most made-ups in chapters 61 to 63, such as shawls and bed linen, use the Rebate of State and Central Taxes and Levies (RoSCTL) instead. PIB confirmed RoSCTL only to 30 September 2026. Trade publications report a Ministry of Textiles order extending it to 31 December 2026 at the same rates, so confirm the current position with your customs broker. RoDTEP, RoSCTL and drawback need no RCMC (DGFT Trade Notice 19/2024-25). Other FTP benefits need one (para 2.57(a)), except on consignments of ₹3 lakh FOB or less (DGFT Notification 36/2026-27). Some All Industry Rates of drawback once carried a condition that no MODVAT credit had been taken on inputs. For those, Ministry of Finance Circular 25/95 (21 March 1995) said a merchant exporter could meet it only by naming the manufacturer on the shipping bill and producing the manufacturer's declaration. That circular predates GST, so confirm current drawback conditions with your customs broker. See RoDTEP for merchant exporters.
How does a UK order work through a merchant exporter?
Here is one order, with the merchant shipping on its own IEC.
- 1
Agree terms and importer
The merchant exporter agrees the specification, price and Incoterm (such as DAP or DDP) with the UK buyer, and puts in writing who will be the UK importer of record.
- 2
Check codes and the origin rule
It confirms the item is freely exportable under India's ITC(HS) schedule, finds the UK commodity code and reads the Annex 3A product rule.
- 3
Collect the maker's evidence
The maker supplies a bill of materials with the code and origin of each input, a cost build-up where a value rule applies, and a description of the process.
- 4
Place the order
The merchant issues a purchase order and the maker a GST tax invoice, at 0.1% only if both sides meet every condition of the concession.
- 5
Make, check and pack
The maker produces the goods and the merchant checks quality and UK labelling. Packing and labelling do not create origin (Article 3.7).
- 6
File the shipping bill
The merchant, or its licensed customs broker, files the shipping bill on ICEGATE under the merchant's IEC, usually under a GST Letter of Undertaking.
- 7
Issue the proof of origin
The merchant completes the CETA origin declaration as exporter, quoting its IEC, or obtains a certificate of origin through DGFT's Trade Connect platform. For a self-declared eCoO, it agrees with the UK customs agent before shipping whether it will be declared as an origin declaration or a certificate of origin: official guidance does not yet settle this.
- 8
Clear UK customs
The importer of record, through a UK-established customs agent, lodges the import declaration, claims preference and pays any duty and import VAT.
- 9
Get paid and keep records
The UK buyer pays the merchant, which realises the proceeds through its AD bank and pays the maker on agreed terms. Both keep origin records.
- UK customs value at or below which no CETA proof of origin is needed
- £1,000
- Validity of a CETA origin declaration or certificate of origin
- 12 months
- Time to realise export proceeds after shipment (12 for rupee invoices)
- 9 months
The £1,000 waiver does not cover shipments split to get round the rules. The 9-month period comes from RBI's FEMA amendment of 22 September 2026: confirm it for each shipment with your AD bank.
Does the Indian maker have to deal with customs?
Not on this route. In India, the shipping bill is filed under the merchant exporter's IEC. In the UK, the import declaration is made by the importer of record or a customs agent acting for it.
HMRC rules decide who that agent can be. It must be established in the UK, and the written instruction must say whether it acts as a direct or indirect representative. Clients not established in the UK must use indirect representation, which makes agent and client jointly and severally liable for the customs debt.
An Indian exporter needs no HMRC registration to make a CETA origin declaration: the HMRC registration and CBIC email steps in some guides apply only to UK goods going into India. Selling DDP in your own name is different. HMRC says a business usually needs premises in the UK to get a GB EORI number, and a business based outside the UK that supplies goods in the UK must register for VAT whatever its turnover. Ask a UK customs agent and VAT adviser before quoting DDP.
| Task | Maker | Merchant exporter | UK importer or agent |
|---|---|---|---|
| Origin information | Supplies inputs, costings and process details | Checks the Annex 3A rule | None |
| Shipping bill on ICEGATE | None | Files under its IEC, or via a broker | None |
| Proof of origin | Written statement if asked | Completes the declaration or gets the certificate | Receives it with the invoice |
| UK declaration, duty and VAT | None | Sends invoice, packing list and proof | Files on CDS and pays |
| Origin records | Should keep them five years; agree it in the supply contract | Keeps them five years | Keeps them at least four years |
| If HMRC checks the claim | May be questioned or visited by India's authority | Answers India's authority | Answers HMRC first |
What does a maker still provide when a merchant exporter ships?
CETA lets an exporter that is not the producer complete the origin declaration on information showing the goods are originating, "which may include a reliance on the producer's information" (Article 3.16(3)). That producer information is the maker's main contribution.
The Annex 3B template is built for this. The signatory ticks Exporter or Producer, gives producer details if different, or writes "various" where there are several producers, and quotes its IEC. It is responsible for proving the statement, which may include written representations from suppliers.
Makers often worry about handing over costings. The UK cannot require an importer to ask the exporter or producer for confidential information (Article 3.16(5)). In a verification, India's authority withholds information the exporter, producer or supplier deems confidential and says only whether the records support the claim (Article 3.25(10)). Agree in the supply contract what the merchant will see and keep.
Can a merchant exporter sell goods made in China to the UK as Indian?
No. Under CETA Article 3.7, some operations never give a product origin, alone or combined. They include:
- changes of packaging, and breaking up or assembling packages
- simple placing in bottles, bags, cases or boxes, and other simple packing
- affixing marks, labels or logos on products or their packaging
- simple assembly
- simple testing, calibration, inspection or certification
So goods bought in China and only repacked, labelled or checked in India stay non-originating. Printing "Made in India" on them changes nothing. Cumulation is bilateral, so only materials that are themselves originating in India or the UK count as originating (Article 3.8).
Imported materials can still be used. A shawl woven in India from imported yarn can qualify if it meets the textile rule: a change of tariff heading plus the Standard QVC, a minimum share of value. See the UK-India rules of origin guide.
Why does the UK buyer care where the goods were made?
Because the duty saving depends on it. The UK-India Comprehensive Economic and Trade Agreement (CETA) entered into force on 15 July 2026. Since then most Indian-origin goods can enter the UK at 0% customs duty, but only when the importer claims preference and the goods meet the origin rules.
| Product (UK code) | Standard UK rate | India paid before 15 July 2026 | CETA rate |
|---|---|---|---|
| Hand-made wool shawls (6214 20 00 10) | 8% | 8% from 1 January 2026 (excluded from DCTS; 6.4% before) | 0% |
| Hand-made earthenware ornaments (6913 90 93 10) | 6% | 2.5% under DCTS | 0% |
| Fresh mango (0804 50 00 40) | 0% | 0% | 0%, no change |
Before CETA, India could use the UK's Developing Countries Trading Scheme (DCTS), but not on chapters it had graduated from, such as chapter 62 from 1 January 2026. So shawls paid the full rate in the last months before CETA, while earthenware ornaments already paid 2.5%: a saving of 2.5 points there, not 6. Mango paid 0% before and after, so CETA gives no saving on it. The origin tests differ too: ceramics need a change of chapter, and shawls a change of heading plus the Standard QVC.
What happens if HMRC checks a CETA origin claim?
HMRC starts with the UK importer, in writing. If that is not enough, it can ask India's competent authority, the Department of Commerce, within two years of the claim (Article 3.25(3) and (4)). If the importer claimed on its own knowledge rather than on an origin declaration or certificate, HMRC asks only the importer and does not involve India (Article 3.25(2), footnote 9).
India's authority may then ask the exporter, producer or supplier for information, send a questionnaire or visit their premises to review records and observe the process (Article 3.25(8)). Only in exceptional circumstances can the UK ask India to carry out a visit, and it may then send at most two government officials as observers (Article 3.25(12) and (14)). They cannot search for documents or question the exporter, producer or supplier directly. HMRC does not inspect Indian workshops itself.
A claim can be denied if the exporter, producer or importer fails to answer a written request (Article 3.19(2)(c)), and both countries keep penalties for breaches (Article 3.23). After two years, HMRC can still use the 2021 UK-India customs mutual assistance agreement (Article 3.25(5)). How to prepare is covered in CETA origin verification.
Should a maker export directly or sell through a merchant exporter?
Neither route suits everyone. It depends on how much paperwork, risk and buyer contact a maker wants. The wider route choice is in how to export from India to the UK.
| Question | Through a merchant exporter | Exporting directly |
|---|---|---|
| Who holds the IEC and files the shipping bill? | The merchant | The maker |
| Who finds and manages the UK buyer? | The merchant | The maker |
| Who does the UK buyer pay? | The merchant, which then pays the maker | The maker, through its AD bank |
| Who signs the CETA origin declaration? | Usually the merchant, relying on the maker's information | The maker, as producer or exporter |
| Who claims RoDTEP? | The merchant, if eligible | The maker, if eligible |
| Who can be asked for origin records? | Both | The maker |
Before supplying a merchant exporter, agree these in writing:
Britbasket, which publishes this guide, works both ways. Some orders ship on its own IEC as a merchant exporter; on others the producer is exporter of record and Britbasket coordinates the order rather than re-invoicing it. UK declarations are lodged by UK-established partner companies. Details are on the services page, and makers who want to supply UK orders can get in touch.
Questions exporters ask
Is a merchant exporter the same as a trader?
In substance, yes. The FTP defines it by trading activity (para 11.33): in practice it buys goods and exports them rather than making them. What makes it an exporter in law is its own IEC (paras 11.21 and 2.05).
What GST does a manufacturer charge a merchant exporter?
Normally the usual rate. A registered supplier may charge 0.1% (0.05% CGST plus 0.05% SGST, or 0.1% IGST) under Notifications 40/2017-Central Tax (Rate), its state counterparts and 41/2017-Integrated Tax (Rate), only if every condition is met, and loses the concession if the goods are not exported within 90 days. The notifications never use the words merchant exporter. Confirm with your CA before invoicing at 0.1%.
Can a merchant exporter sign the CETA origin declaration for goods it did not make?
Yes. Article 3.16(3) allows it to rely on the producer's information, and the Annex 3B form has a box for producer details. The exporter still answers for the declaration, so it should hold the maker's evidence before signing.
Who does the UK buyer pay in a merchant export?
The merchant exporter, which sells in its own name and realises the proceeds through its AD bank. It pays the maker separately under their domestic contract. In a third-party export, the invoice, export order and e-BRC are in the third-party exporter's name (FTP para 2.42).
Is merchanting trade the same as being a merchant exporter?
No. Merchanting trade (FTP para 2.39) moves goods from one foreign country to another without touching an Indian port, with an Indian intermediary and subject to RBI guidelines. A merchant exporter ships goods out of India under its own IEC.
What does merchant exporter mean in Hindi?
In plain Hindi it can be written as व्यापारी निर्यातक (vyapari niryatak), a trader who exports. For a legal document, check the official Hindi text of the FTP.
Rahul
Director, BRITBASKET PRIVATE LIMITED
Britbasket exports from India to UK wholesale, retail and foodservice buyers, and has cleared shipments into the UK by air and by sea. Registered in India: CIN U47220HR2025PTC128831, GSTIN 06AANCB2770Q1Z2, IEC AANCB2770Q. About the company
Sources
- DGFT: Foreign Trade Policy 2023, Chapter 11, Definitions (v1.2.2)
- DGFT: Foreign Trade Policy 2023, Chapter 2 (v1.2.2)
- DGFT: Foreign Trade Policy 2023, Chapter 4 (v1.2.2)
- DGFT: Handbook of Procedures 2023, Chapter 2 (July 2026)
- UK Government: UK-India CETA, Chapter 3: Rules of origin
- UK Government: UK-India CETA, Annex 3A: Product-specific rules
- UK Government: UK-India CETA origin declaration, Annex 3B
- HMRC: Customs debt liability (13 August 2026)
- HMRC: Get someone to deal with customs for you (6 February 2025)
- HMRC: Applying to use simplified declarations for imports (3 February 2025)
- DBT: Rules of origin in India (business.gov.uk)
- APEDA: e-RCMC circular and requisite documents (21 July 2023)
- FSSAI: Kind of business eligibility (1 April 2026)
- Ministry of Finance: Notifications 40/2017-CT (Rate) and 41/2017-IT (Rate) (23 October 2017, BHEL copy)
- RBI: FEMA 23(R)/(1)/2026-RB (22 September 2026)
- UK Trade Tariff: 6214 20 00 10, India (30 October 2026)
- UK Trade Tariff: 6913 90 93 10, India (30 October 2026)
- UK Trade Tariff: 0804 50 00 40, India (30 October 2026)
- DGFT: Notification No. 41/2026-27, continuation of RoDTEP (30 September 2026)
- DGFT: Trade Notice 11/2026-27, CETA eCoO (13 July 2026)
- TaxGuru: Ministry of Finance Circular 25/95 on drawback for merchant exporters (21 March 1995)
- UK Trade Tariff API: 6214 20 00 10 as at 1 December 2025 (6.4% DCTS rate, India not excluded)
- DGFT: Trade Notice No. 19/2024-25, no RCMC for remission schemes (4 October 2024)
- DGFT: Notification 36/2026-27, RCMC exemption (15 September 2026)
- PIB: RoSCTL and RoDTEP continued to 30 September 2026 (1 April 2026)
- DGoS: ICES Advisory 10/2022, AD code (14 June 2022)
- CBIC: Circular 125/44/2019-GST (18 November 2019)
- HMRC: Get an EORI number (7 August 2025)
- HMRC: Register for VAT (10 October 2024)
- TeamLease RegTech: RoSCTL extended to 31 December 2026 (October 2026)
Last reviewed 30 October 2026. Border, tariff and plant-health rules change. Check the sources above before relying on this guide for a specific consignment.
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