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Export promotion is a critical activity for any booming economy. India, being one of the very fastest developing economies in the world, provides various export promotion schemes for businesses.
The Indian government has introduced sector-specific as well as sector-agnostic export promotion schemes to boost growth. This article provides a list of export promotion schemes in India to aid exporters. Whether you are a start-up or an established business, it would be vital to know these schemes to use them to their full potential.
The primary governmental organization responsible for the promotion and regulation of trade is the Ministry of Commerce and Industry. It aims to make Indian products and services more competitive in the world market. It facilitates export growth, helps exporters cope with problems, and creates a favorable atmosphere for trade through various policies.
The Foreign Trade Policy (FTP) is the most prominent constituent of the export promotion policy of India. FTP articulates a comprehensive framework containing the vision, objectives, and strategies of the government in boosting export activities. The FTP from 2015 to 2020 focused on:
With the concerted efforts from the Ministry of Commerce and Industry, the country lays out its Foreign Trade Policy to help build a vibrant export ecosystem. Exporters need to understand and work within the parameters that have been outlined for them by the government for their export promotion.
The Indian government introduced the RoDTEP Scheme to reimburse the exporter all the unrebated taxes and duties embedded in the manufacturing and exportation process. Through this, it aspires to make Indian goods more competitive in the international markets.
Reimbursement of Embedded Taxes: The scheme reimburses duties and taxes that are not otherwise credited or reimbursed, like electricity duty, VAT on fuel, and mandi tax.
Compliance with WTO: RoDTEP is WTO-compatible, unlike its precursor MEIS, which was replaced due it's non-complaince with WTO.
Digitized Process: RoDTEP has a completely digital process, where the claims are processed faster and more transparently using the ICEGATE portal.
Transferable Duty Credit Scrips: Exporters receive refunds as duty credit e-scrips, which can be used to offset import duties or traded in the market, providing greater flexibility.
Registered Exporters: Only registered exporters under the Directorate General of Foreign Trade (DGFT) and holding a valid IEC code are eligible to claim RoDTEP.
Types of Exports: The exported commodities should be within the products notified by the government for eligibility under RoDTEP. The exporter must check if the products fall within the list released by the government.
Exemption from SEZ and EOU: Special Economic Zones (SEZ) units, Export Oriented Units (EOUs) and specific items are out of the ambit of this scheme.
Declaration in Shipping Bill: At the time of export, in the shipping bill exporters are required to declare their intent to claim RoDTEP benefits.
The Service Exports from India Scheme, short for SEIS, is a scheme initiated in 2015-2020 FTP to increase foreign trade. It is designed to improve the international competitiveness of India’s service sector.
Duty Credits Scrips to Service Exporters: The government, under SEIS provides the service exporter with duty credit scrips to offset a variety of import duties and taxes.
Percentage-Based Benefits: The incentives in this program are percentage-based and depend on the value of eligible service exports. Percentages vary from 3% to 5%, depending on the nature of services offered.
Promotion of Various Services: SEIS encompasses a wide range of service industries such as professional services, consultancy, educational services, health and medical services, tourism and hospitality, and IT-enabled services. This diversity encourages different players to join hands with services exports.
Services that can be exported from India and are eligible for support under SEIS include all the following:
IT and IT-enabled Services: Software development, application services, IT consulting, and ancillary services.
Professional Services: Legal, accounting, engineering, and other consultancy services.
Education Services: Export of educative services, which include e-learning and distance learning.
Healthcare Services: Medical tourism and telemedicine services offered to the rest of the world.
Tourism and Travel Services: Services offered by travel agencies, tour operators, and hotels to foreign tourists.
Other Services: This will include cultural, sports, and entertainment among others.
The EPCG scheme enables an exporter to import capital goods at zero or reduced customs duty on condition that the exporter agrees to fulfill specific export obligations. This scheme encourages the use of modern equipment and machinery to allow a boost in production capacities.
Eligibility Criteria:
Registered Exporters: Only such exporters, registered with the DGFT and with an effective IEC are eligible to avail of benefits under the EPCG Scheme.
Eligibility of Capital Goods: The scheme is for capital goods needed for the production of exportable goods. These have to be in the DGFT-specified product category of relevant products.
Minimum export turnover requirement: Exporters are required to meet minimum turnover requirements specified by the sector and product.
Export Commitment: The exporter is to fulfill their export obligations within a specified time. The obligation is generally the export of an amount equal to several times the total value of capital goods imported under the EPCG Scheme. Such obligation period varies but generally ranges between 6 to 8 years.
Compliance with Conditions: Exporters need to comply with various conditions inter alia, to keep records of capital goods imported, production details, and export transactions. The authorities can regularly scrutinize the books to check whether the provisions of the scheme are complied with or not.
End-Use Conditions: Imported capital goods under the EPCG Scheme should be put to use in the manufacture of goods to be exported. The exporter must ensure that the machinery and equipment used are only for this purpose.
The EPCG Scheme is one of the most powerful tools for Indian exporters to be able to increase their level of production and compete efficiently with other countries in the international market.
The Duty Drawback Scheme is one of the most important export promotion measures adopted by the Indian Government as it facilitates exporters and compensates them for losses that they incur. It offers incentives in the form of a financial bonus that will enable Indian business houses to maintain pricing competitiveness and thus enhance overall profitability.
The concept of duty drawback is that no duties and taxes should be paid on inputs when they are exported. The duty drawback scheme enables exporters to claim refunds for the following:
Customs Duties: Custom duties are the duties paid on the raw materials and inputs imported to make the exports.
Central Excise Duties: These are the duties paid on the domestic inputs used to manufacture the exportable goods.
Goods and Services Tax (GST): GST can be claimed as a refund by exporters on goods and services used in the manufacture of exports in some cases.
It allows Indian exporters to get back the duty paid at production, thereby leveling with foreign competitors who are not subjected to such tax.
Eligibility: The applicant has to fulfill the eligibility criteria, which include being registered with the Directorate General of Foreign Trade and having an Import Export Code; besides, the goods exported have also to be against the list of eligible products for drawback claims.
Application Filing: The application for duty drawback has to be filed through the online portal of the Customs Department. It should be submitted within a stipulated time frame from the date of export of the goods, which is normally 60 days.
Documents Required: In the case of an application for duty drawbacks, exporters have to provide relevant documents, such as:
Issuance of Drawback Certificate: As soon as the verification procedure is complete, the authority issues the customs a drawback certificate equal to the amount of customs duty paid.
These rates of duty drawback are based on categories of exported goods and customs duties paid by exporters. The government increases these rates from time to time based on the changes in the structure of taxation and their support towards exporters.
It goes without saying that the exports from India are impossible to take place without proper infrastructure. The Trade Infrastructure for Export Scheme, or TIES, is another scheme of the government of India to boost export infrastructures all over the country.
The TIES scheme supports a variety of infrastructure projects to enhance the export capabilities of Indian businesses. The key types of projects that are eligible for support under the scheme include:
Export Infrastructure for Trade, or TIES, is a salient component of India's strategy of export promotion and can respond to the imperative to better improve infrastructure that supports export production.
Market Access Initiative is a program the Government of India has formulated with strategic intent to ensure the exportable potential of its products in international markets. Taking into account the stringent difficulty in accessing new markets or diversified markets for India, MAI is an initiative to provide Indian exporters access to new markets.
Market Research and Intelligence: MAI provides extensive market research and intelligence reports. This initiative enables the exporter to discover markets, trace trends, and understand consumer preferences critical for successful entry into markets.
Participation in Trade Fairs and Exhibitions: The MAI promotes participation in international trade fairs and exhibitions to increase visibility and exhibit Indian products.
Organizing Trade Missions: It organizes trade missions to the target countries so that direct contact between Indian exporters and foreign buyers can be established.
Capacity Building: The MAI also emphasizes the need for capacity building and skill development for exporters. This may be in the form of training to enhance the exporter's knowledge and expertise in export documentation, quality standards, and market access strategies.
Exporters can avail financial assistance under MAI only if they meet all the eligibility criteria:
Registered Exporters: The applicant must be a registered exporter and must have a valid Import Export Code (IEC) issued by the Directorate General of Foreign Trade (DGFT).
Sector Relevance: The products or services for which funding is being sought should be in line with the objectives of the MAI and should have export potential.
Submission of Proposals: The exporter has to submit proposals outlining the activities for which funding is being sought, including a detailed budget and expected outcomes.
The process of applying for financial support is conducted online through the Ministry of Commerce and Industry. During the application procedure, one has to furnish necessary documentation such as the IEC, details of business registration, and suitable project proposals for financial aid.
While national export promotion schemes are important for the development of the overall export landscape in India, state-level export promotion schemes are no less important. These are tailor-made initiatives to fulfill the needs and challenges that local industries face and provide a targeted approach according to the regional strengths of the economy.
The government of Maharashtra has launched the Maharashtra Export Promotion Policy that focuses on developing export competitiveness, financial assistance, marketing development support, and infrastructure development support in key areas of the export sectors, such as textiles, pharmaceuticals, and engineering goods.
The export policy of Gujarat is to make Gujarat's export contribution rise to increase the national total. The small and medium-scale enterprises that are engaged in exports have been supported through the Gujarat Industrial Development Corporation which has established export zones.
Incentives in the form of interest subsidies, export loans, participation in trade fairs, and the development of logistics infrastructure are included in the Tamil Nadu Industrial Policy. Sectors promoted are textiles, leather, and automobiles.
Under Karnataka's Export Promotion Policy, financial support is envisaged for market access participation in international exhibitions and use of infrastructure facilities to build up exports from the State. Karnataka has identified segments like IT, electronics, and biotechnology for export performance.
The Punjab State Export Promotion Policy aims to boost the export levels in agro-based industry sectors along with the textiles and manufacturing sectors. Different incentives are offered like the upgradation of technology subsidies, assistance for various trade promotion activities, and setting up export-oriented units.
There are provisions for augmenting export capabilities in the Andhra Pradesh Industrial Development Policy, which include infrastructure development support, financial incentives to exporters, and promotion of the agriculture, textiles, and information technology sectors.
Uttar Pradesh Export Promotion Policy focuses on exporting through initiatives such as market development support, incentives to the participants for participation in international trade fairs, and enhancement of logistics and transport infrastructure in the state.
State-specific export promotion programs are very critical to the competitive ability of Indian exporters. It deals with problems relevant to the particular region as well as exploiting strengths locally.
Export promotion schemes refer to government policies to aid and promote the Indian industry for engaging in international trade. It provides a range of incentives that cover financial, infrastructure development, marketing support, and skill development to make Indian products competitive in world markets. Resources and information are provided to exporters that enable them to overcome problems and strengthen their market presence.
Generally, applying for schemes under export promotion is very easy. It depends on knowing what schemes are available by accessing the official website of the Ministry of Trade & Commerce or the respective state government. Necessary documents such as IEC, business registration, and proposals for the project in addition to financial statements should be provided.
The eligibility requirements for export promotion schemes vary based on the specific initiative that one is applying for. Common criteria would include that exporters must be registered with the Directorate General of Foreign Trade (DGFT) and must have a valid Import Export Code (IEC). The products or services provided must align with the objectives of the export promotion scheme, and some schemes may have other provisions for small and medium enterprises.
Export promotion schemes provide financial support and access to market development, training programs, and advisory services that are available for new exporters. These sources could help manage costs associated with entry into markets, market marketing, and other logistics of trading.
Absolutely! Export promotion schemes can be of great significance for small businesses. Many specific initiatives are targeting SMEs, providing supportive assistance, financial incentives, and other sources to succeed in international markets.
Indian exporters have access to various payment methods for conducting international transactions. Here are some common options:
The perfect alternative to these traditional methods for international payments is Karbon. Karbon provides tailored features to meet the needs of Indian exporters. It ensures money transfers promptly using competitive exchange rates and international virtual bank accounts. To learn more, speak to an export payments expert at Karbon.
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