Export Promotion Schemes in India
Promotional Measures in Foreign Trade Policy
Exports help a country show its importance to the world. It reflects the amount of demand for its currency amongst other countries. If a country’s exports are high, that gives rise in demand for its currency, which ultimately helps it import items at a cheaper rate. Thus exports play a crucial role in the development of the economy. India has thus taken measures to implement schemes which promote the exports of goods and services from its country. These measures have been discussed below.
- Export Promotion Schemes
Exporters in India face hurdles due to local taxation and infrastructure woes. Through export promotion schemes, the exporters are benefited in a way to help them be competitive enough in the international market. These measures are as follows:
1.1 Exports from India Scheme
(i) Merchandise Exports from India Scheme (MEIS)
This scheme promotes exports of notified goods/ products to notified markets as listed in Appendix 3B of Handbook of Procedures, by granting freely transferable duty credit scrips of 2-5% on realization of FOB value in free foreign exchange.
Duty Credit Scrips can be used to offset import duties incurred by exporters. This helps them foray into new products and markets. These scrips can be used to offset custom duties, excise duties and payment of service tax. This gives a boost to the profitability of the exporting organization.
MEIS benefit covers the mentioned goods in value of Rs 25,000/- as FOB per consignment, sent through courier or foreign post office with the help of e-commerce.
(ii) Service Exports from India Scheme (SEIS)
Service providers get the benefit of transferable duty credit scrips. The duty credit scrips are 5% of the total earnings in foreign exchange.
- Duty exemption & remission schemes
Import duty exemptions can be availed on imports which will be used to manufacture resultant exported products. In order to avail these exemptions, the exporter needs to take an Advance Authorization from the DGFT. This cannot be taken on prohibited products, but can be taken on restricted items with certain terms and conditions. STE reserved items can be imported with advanced authorization if it is channeled through State Trading Enterprises (STEs) or a no objection certificate is obtained from the same.
2.1 Advance Authorization Scheme
This scheme permits duty free imports for inputs which are a part of the final product to be exported. There is a contingency clause here, which determines the amount of products to be exported within 18 months as per the standards set by SION (Standard Input Output Norms) or self-declaration as per procedures of FTP. Validity for importing inputs is of 12 months. The Advance Authorization is issued to manufacturer exporters or merchants in support with manufacturers.
2.2 Advance Authorization for annual requirement
This scheme gives manufacturers the freedom to export any products from a particular group using duty exempted imports. There still has to be a match with the imported product and the final exported products as per SION. The manufacturers provided this scheme need to have at least 2 years of authorization prior to availing this scheme.
2.3 Duty Free Import Authorization (DFIA) Scheme
DFIA Scheme provides with transferable authorization which can be obtained even after exports have been made. But the criteria here is of 20% value addition. Thus it is availed by many exporters as this can be procured even after the exports have been made, and then sold in the open market due to its transferability.
2.4 Duty Drawback of Customs/Central Excise Duties/Service Tax
This scheme provides refund of duty paid on imported equipment which is used to produce products which are then exported. But, to be eligible for this refund, you first need to export the products. It is governed by the department of revenue. The refund can be availed by all industry rate standards or brand rate standards.
2.5 Rebate of Service tax through all industry rates
Service tax which is paid to produce goods which are then exported can be availed at all industry rates through this scheme.
- EPCG SCHEME
3.1 Zero duty EPCG scheme
Customs duty paid on capital goods imported for pre-production, production and post-production reasons is waived off through this scheme. The obligation is to have an export of 6 times the value of the duty waived, within 6 years of time.
This scheme is for pre as well as post-exports. Additional export obligations will be implemented which include meeting a specific export target in addition to the existing average export performance for three years.
3.2 Post Export EPCG Duty Credit Scrip Scheme
This scheme is for exporters who import capital goods with payment of custom duty against the credit scrips obtained post export of products.
- EOU/EHTP/STP & BTP SCHEMES
Companies being established for the sole purpose of exporting fall under this scheme. Once registered under this scheme, they are entitled to waiver of all the customs, excise duties and service taxes.
- OTHER SCHEMES
5.1 Towns of Export Excellence (TEE)
Certain towns which produce goods worth Rs 750 Crores and above are classified as TEE. They have potential for growth in exports and can be of financial assistance to recognized associations as per MAI Scheme.
5.2 Rebate of duty on “export goods” and “material” used in manufacture of such goods
Rebate of the excise duty paid on exportable goods or on the material used in its manufacturing can be claimed under this scheme. It is governed by the Central Excise Rules, 2002, Rule 18.
5.3 Export of goods under Bond i.e. without payment of excise duty
This scheme provides the goods to be exported with a clearance from the approved factory, warehouse and other premises, without payment of central excise duty as per rule 19 of the central excise rules, 2002.
5.4 Market Access Initiative (MAI) Scheme
Financial assistance is provided in order to market the products in international markets to export promotion councils, industry and trade associations, Indian commercial missions abroad and state government agencies to increase the exports of specific products and services. This includes marketing activities like participation in trade fairs, setting up booths, showrooms, warehouses, etc., publicity campaigns and to do market surveys in the international markets.
5.5 Marketing Development Assistance (MDA) Scheme
Financial assistance is provided in order to market the products in international markets to exporters having turnover of more than 30 to increase the exports of specific products and services. This is given for marketing activities like participation in trade fairs, setting up booths, showrooms, warehouses, etc., publicity campaigns and to do market surveys in the international markets.
5.6 Status Holder Scheme
Exporting companies are given recognitions on the basis of their export performances. These recognitions are in the form of tags such as One Star Export House, Two Start Export House, Three Star Export House, Four Star Export House and Five Star Export house which has the highest performance. These houses are eligible for various non-fiscal privileges as designated in accordance to the foreign trade policy of India.