{"id":41014,"date":"2022-03-09T12:52:58","date_gmt":"2022-03-09T07:22:58","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=41014"},"modified":"2022-03-09T12:54:16","modified_gmt":"2022-03-09T07:24:16","slug":"export-promotion-schemes-in-india","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/export-promotion-schemes-in-india\/","title":{"rendered":"Export Promotion Schemes in India: Explained"},"content":{"rendered":"\n<p class=\"has-drop-cap\">As you know, export plays a significant\nrole in the nation&#8217;s economic development. The increasing inward foreign\nremittance is beneficial for the nations as it helps in creating more jobs and\nkeeps the nation in healthy financial state. Henceforth, India needs to improve\nits export capabilities through the introduction of various Export Promotion\nSchemes. <\/p>\n\n\n\n<p>India is still a developing nation.\nChina&#8217;s overall exports are nearly eight times that of India. Despite being one\nof the world&#8217;s largest nations, India barely secured 18th position in the list\nof top exporting nations globally in 2019. Even a small nation like Singapore\nhas managed to outshine India with a considerable margin in the export\ndepartment. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Why India&#8217;s export figures are not improving? <\/h2>\n\n\n\n<p>One of the prominent reasons for India&#8217;s sub-par export performance is\nits high cost of exportable commodities. India exporters are finding it tough\nto sell their offerings at acompetitive rate, which makes them uncompetitive in\nInternational markets resulting in loss of orders. <\/p>\n\n\n\n<p>So why do Indian commodities do not have\ncompetitive prices? They could be many reasons for the same, and some of them\nare mentioned below: <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Poor Infrastructure<\/h3>\n\n\n\n<p>This escalates the cost of operating\nbusiness in India. For instance, it is affordable and seamless to move a\nconsignment via ship from Hongkong to Kolkata; then it is to move the same from\nChennai to Mumbai by road\/rail.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Associated Costs<\/h3>\n\n\n\n<p>&nbsp;Rail freight rates for the Export sector are\non the higher side as compared to other nations. Besides, Industrial electricity\nrates in our nation are quite steep. The high cost of land for establishing\nproduction units is another key factor leading to an increase in prices. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Cost of credit<\/h3>\n\n\n\n<p>&nbsp;Owing to high inflation, the rate of interest\nin India has remained on the higher side for a very long duration. <\/p>\n\n\n\n<p>All the aforesaid factors lead to a rise\nin the cost of export items as compared to other nations. Henceforth, the GOI\nstrives to compensate for the downsides that the exporters encounter by\nimplementing various Export Promotion Schemes\/Export Incentives in India.<\/p>\n\n\n\n<p>Therefore for better export pricing and\nto stay competitive in the international market, it is become vitally important\nto have a complete understanding of such schemes. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Key Export Promotion Schemes in India for Exporters <\/h2>\n\n\n\n<p>The following section shall cover all the\nprimary export schemes in detail. The benefit under more than one scheme can be\ntaken for a given consignment with some exceptions. So go through all the\nschemes and examine your <strong>eligibility to access export incentives in India. <\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Merchandise Exports from India Scheme (MEIS Scheme)<\/h3>\n\n\n\n<p>The objective of this Export Promotion\nScheme is to encourage the producer and export of notified products\/goods from\nIndia. <\/p>\n\n\n\n<ul><li>Funds\nAllocated \u2013 40,000 Cr. Annually (Approx) <\/li><li>Under\nthe said scheme, an incentive of 2 to 5 per cent of the FOB value of exports is\nprovided to exporters and manufacturer cum exporters regardless of their yearly\nturnover. <\/li><li>The\nexport of items notified in Appendix 3B only have access to MEIS benefits.<\/li><li>There\nare over 8000 items\/products that fall under this scheme<\/li><li>There\nis no limitation of the nation. i.e. eligible items shipped to any nation can\naccess the MEIS scheme. <\/li><li>MEIS\nrate of incentives varies product-wise. <\/li><li>Application\nrelating to MEIS scheme is to file digitally to the respective DGFT office<\/li><li>MEIS\nincentives are not provided in the form of bank transfers or cash. It is\navailable in the form of duty credit scrip, also called MEIS licenses. These\nlicenses can be utilised for payment of import-related duties or can be sold in\nthe open marketplace at a discounted rate.<\/li><li>MEIS\nis soon to be replaced with the new RoDTEP Scheme. However, shipments till\nDecember 2020 or March 2021 can still claim MEIS benefits.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Rebate of Taxes and Duties on Export items (RoDTEP Scheme)<\/h3>\n\n\n\n<ul><li>The new RoDTEP Scheme serves as a replacement for MEIS Scheme, which came into effect in December 2020.<\/li><li><strong>RoDTEP Scheme<\/strong><sup><a href=\"https:\/\/www.dgft.gov.in\/CP\/?opt=RoDTEP\"><strong>[1]<\/strong><\/a><\/sup> was launched because the former scheme was not WTO-compliant and it didn&#8217;t comply with the international trade rules. <\/li><li>This Export Promotion Scheme seeks to remit all those undercover taxes and levies, which was otherwise not available under any schemes, for example: <\/li><\/ul>\n\n\n\n<ol><li><strong><em>State and Central taxes on fuel utilised for shipment of exportable products. <\/em><\/strong><\/li><li><strong><em>The duty imposed by the state on electricity utilised for production <\/em><\/strong><\/li><li><strong><em>Mandi tax imposed by APMCs.<\/em><\/strong><\/li><li><strong><em>Stamp duty and toll tax on the shipping documents <\/em><\/strong><\/li><li><strong><em>Toll tax &amp; stamp duty on the import-export documentation. <\/em><\/strong><\/li><\/ol>\n\n\n\n<h3 class=\"wp-block-heading\">Service Export from India Scheme (SEIS Scheme)<\/h3>\n\n\n\n<ul><li>Service Exports from India Scheme aims to advocate and strengthen export of notified services from India. <\/li><li>Service exports also facilitate the massive foreign exchange to the nation, henceforth, the motivation of the service exporters is vital, and it is the need for an hour. <\/li><li>Under this scheme, an incentive of 3 to 7 per cent of net foreign exchange earnings is facilitated to service exporters. <\/li><li>This Export Promotion Scheme seeks service providers to have a valid <a href=\"https:\/\/corpbiz.io\/iec-registration\"><strong>IEC code<\/strong><\/a> with minimum net foreign exchange earnings amounting to 15,000 USD to be eligible under the scheme. <\/li><li>Services mentioned in Appendix 3D are only eligible to access the rewards.<\/li><li>Just like the MEIS scheme, rewards under this scheme are facilitated in the form of duty credit scrips.<\/li><li>An application under this scheme is to be filed digitally to the respective DGFT office<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Advance Authorisation Scheme (AAS)<\/h3>\n\n\n\n<ul><li>Advance\nLicense scheme came into effect to ensure duty-free import of raw materials\nrequired for the production of exportable items<\/li><li>It\nindicates that no import shall be imposed on the import of raw material if it\nis used for the production of exportable items. <\/li><li>An\nAdvance license can be granted for deemed exports (For supply to any AA\/EPCG\nholder or Ex. Supply to EOU units) and physical exports (including supply to\nSEZ).<\/li><li>Advance\nLicense comes with a requirement of maintaining at least 15 per cent value\naddition and export the items within 18 months from the date of the issuance of\nthe license. <\/li><li>The\nmaterials imported under this scheme come with &#8220;Actual User\ncondition&#8221;-meaning they cannot be sold or transferred to any third party. <\/li><li>This\nExport Promotion Scheme is introduced by the Directorate General of Foreign Trade\n<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Duty-free Import Authorisation (DFIA Scheme)<\/h3>\n\n\n\n<ul><li>The\naim of this scheme is to facilitate duty-free import of raw material. But,\nunlike AA, this scheme refers to a post-export scheme. It implies that\nduty-free import is permissible only after the export is made. <\/li><li>DFIA\nscheme covers only those items which are listed under Standard Input-Output\nNorms (SION).<\/li><li>Another\nkey feature of this scheme is that it is transferable in nature. However, the\ncondition relating to the actual user condition doesn&#8217;t apply here. <\/li><li>Just\nlike the Advance Authorisation Scheme, the DFIA scheme is launched by the DGFT.\n<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Duty Drawback Scheme (DBK Scheme)<\/h3>\n\n\n\n<ul><li>DBK\nscheme proposes refund of the duties encountered by the exporter during\nshipment. The scheme was launched and probed by the Department of Revenue\n[Customs Department].<\/li><li>Under\nthis scheme, duties of central excise and customs authority that are chargeable\non imported and domestic material utilised in the production of exportable\nitems are refunded back. <\/li><li>The\nduty drawback rate differs product-wise. One can locate the entire Duty\nDrawback schedule on the CBIC&#8217;s portal. <\/li><li>Unlike\nother schemes, the amount under this scheme is directly credited into the\nexporter&#8217;s bank account within two months from the date of shipment. <\/li><li>If\nyou are accessing the GST refund, then you should choose a lower rate of the\nDuty Drawback.<\/li><li>DBK\ncan be integrated with any other schemes as mentioned, but it cannot be\nintegrated with the DFIA Scheme or Advance Authorisation scheme<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">RoSCTL Scheme: Rebate on State and Central Taxes and Levies <\/h3>\n\n\n\n<ul><li>The\nnew RoSCTL Scheme was introduced by GOI as a replacement for its predecessor on\n07.03.2019.<\/li><li>RoSCTL\nscheme only covers Apparels &amp; made-up Industries encompassing Chapters 61,\n62 &amp; 63 of ITC (HS).<\/li><li>This\nExport Promotion Scheme facilitated a refund of Central and State taxes and\nlevied like VAT on fuel, Mandi tax, Captive power, Electricity Duty, etc.<\/li><li>Directorate\nGeneral of Foreign Trade implemented this scheme for rewarding exporters via\nduty credit scrips.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Export Promotion Capital Goods Scheme (EPCG Scheme)<\/h3>\n\n\n\n<ul><li>The\naim of this Export Promotion Scheme is to provide the import of capital\ngoods\/machinery for manufacturing goods and improve India&#8217;s manufacturing\ncompetitiveness.<\/li><li>Under\nthe EPCG Scheme, Manufacturer cum exporter or a merchant exporter connected\nwith a supporting manufacturer can import capital goods\/equipment required for\nPre-production, production and post-production of exportable items at zero per\ncent duty<\/li><li>Application\nto secure an EPCG License should be made to the respective DGFT office. <\/li><li>The\nService exporters earning in overseas currencies can also apply for an EPCG\nlicense. Various service exporters can leverage this scheme to minimise capital\ncosts. Service Exporters like Tour and travel operators, hotels, logistics\nfacilities, construction entities can use this scheme by importing capital\ngoods\/machinery at zero per cent duty. <\/li><li>EPCG\nschemes underpin some export obligations. The import of capital goods under\nthis scheme is subject to an export obligation which is equivalent to six times\nof duty saved, to be fulfilled within six years from the date of issuance of\nEPCG authorisation. <\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">EOU\/EHTP\/STP\/BTP Schemes<\/h3>\n\n\n\n<ul><li>EOU\nScheme [Export-oriented Units] is accessible to units that are only engaged\nwith exporting activities. <\/li><li>This\nscheme came to effect in 1981, and it aims at increasing export activities in\nthe country. <\/li><li>The\nEOU schemes intend to facilitate a viable framework to the companies involved\nwith 100 per cent exports by rendering them certain waivers and concessions in\ncompliance and tax-related matters, thereby making it seamless for them to\noperate a business. <\/li><li>The\nprimary benefits of this scheme include; Nil import duties for the procurement\nof raw materials or capital goods, swift custom clearance, etc. <\/li><li>An\napplication has to be filed with the Board of approval to establish an EOU\nunit. <\/li><li>The\nminimum investment in production facility and machinery required is 1 Cr with\nexemptions to certain sectors. <\/li><li>Around\n2011-12, the EOU scheme turned out less effective owing to the unavailability\nof tax benefits under the IT Act. <\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">GST Refund for Exporters \/ LUT Bond \/ 0.1% GST benefit for Merchant\nExporters.<\/h3>\n\n\n\n<ul><li>Exporters\nhave facilitated an array of preferential facilities as per the GST Act. <\/li><li>The\nLUT facility under GST enables exporters to skip GST payment in the\npre-shipment phase. For this purpose, the exporters need to secure a letter of\nundertaking\/bond. <\/li><li>Exporters\ncan prompt customs for reemitting claim refund on IGST paid for the shipment. <\/li><li>Merchant\nexporters\/traders can procure exportable goods from domestic suppliers at a\nconcessional GST rate of 0.1%. This minimizes the burden of GST and resolves\nproblems relating to working capital to a great extent. <\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Transport and Marketing Assistance Scheme (TMA Scheme)<\/h3>\n\n\n\n<ul><li>This\nExport Promotion Scheme was introduced on 01.03.2019, and it covers\nagricultural export products only. <\/li><li>Under\nthis scheme, the GOI subsidises the freight cost to make Indian agricultural\nitems competitive in the international market. <\/li><li>The\nTMA scheme covers export products cited under chapters 1 to 24 of the ITC HS\ncode, including plantation and marine products. But, some specific products\nenlisted under Chapters 1 to 24 would not be encompassed under the scheme for\nassistance <\/li><li>Assistance\nunder this scheme shall be facilitated in cash via a bank transfer as a part of\nsubsidisation of freight cost addressed by the exporter. <\/li><li>DGFT\nis the prime authority that has launched this scheme.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Deemed Export Benefits<\/h3>\n\n\n\n<p>The objective of deemed export benefits\nis to inculcate the transparent and unprejudiced environment for the domestic\nmanufacturers in certain specified scenarios, as may be directed by the GOI from\ntime to time. <\/p>\n\n\n\n<p><strong>Given supplies are deemed as Deemed Exports \u2013<\/strong><\/p>\n\n\n\n<ul><li>Supply of items against Advance Authorisation (AA) \/ Advance Authorisation for annual requirement \/DFIA; <\/li><li>Supply of items to EOU\/ EHTP\/ STP \/BTP Units; <\/li><li>Supply of capital goods against EPCG License.<\/li><\/ul>\n\n\n\n<p><strong>Common benefits available to Deemed Export supplies include; <\/strong><\/p>\n\n\n\n<ol><li>Advance Authorisation\/DFIA; <\/li><li>Refund of terminal excise duty.<\/li><li>Deemed Export Duty Drawback;<\/li><\/ol>\n\n\n\n<h3 class=\"wp-block-heading\">Market Access Initiative (MAI Scheme)<\/h3>\n\n\n\n<ul><li>Market\nAccess Initiative (MAI Scheme) rolled out by the GOI on 16th February 2018.<\/li><li>This\nExport Promotion Scheme aims to play a proactive role in encouraging export\nfrom India by pinpointing new markets and supporting the export promotion\nundertakings in the new markets. <\/li><li>The\nscope of the scheme is to facilitate financial aid to eligible departments for\nexecuting undertakings like market research, direct\/indirect marketing, and\npromotion &amp; branding in new markets, handling statutory compliance costs in\nthe importing nation. <\/li><li>The\neligible department includes all the Commodity Boards, Export Promotion\nCouncils, certified trade promotion agencies, recognised associations,\nindividual exporters, reputed institutions like IITs, IIM&#8217;s, etc.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\">How does the MAI scheme benefit Individual Exporters?<\/h4>\n\n\n\n<ul><li>MAI\nscheme benefits individual exporters in two different ways. To avail of such\nbenefits, the Individual exporters need to contact the respective EPC. <\/li><li>Reimbursement\nof Airfare for Global Events \u2013 Maximum of Rs. 70,000\/- (Individual ceiling) (Rs.1lakhs\nfor LAC nations). However, such benefit is only accessible to exporters having\nannual turnover below 30 cr in the preceding FY. Also, the exporter should be\nthe EPC&#8217;s members for at least one year to become eligible for this benefit. <\/li><li>Statutory\ncompliances in the buyer nation- Maximum ceiling of Rs, 50, 00,000\/annum per\nexporter on a 50-50% sharing basis. Statutory compliance entails Registration\ncharges paid in the importing nation in the case of biotechnology, pharma,\nchemicals\/ agrochemicals, animal\/marine products, etc.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Market Development Assistance (MDA) Scheme<\/h3>\n\n\n\n<ul><li>This\nis an erstwhile Export Promotion Scheme that was clubbed into new Market Access\nInitiative, 2018<\/li><li>The\nnew scheme encompasses the scope of both the previous MAI scheme and the Market\nDevelopment Assistance scheme. <\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Towns of Export Excellence (TEE)<\/h3>\n\n\n\n<ul><li>The\noverall export valuation of town goods is more than Rs 750 Cr. And owing to\nhigh export potential, these goods are tagged as Towns of export excellence\n(TEE).<\/li><li>Fiscal\nsupport is facilitated to recognised facilities in those towns as per the norms\ncited under MAI Scheme<\/li><li>According\nto Appendix 1B, there are 37 towns of export excellence pan India. <\/li><li>TEE\naims to indirectly benefit the Individual exporters<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Interest Equalisation Scheme (IES)<\/h3>\n\n\n\n<ul><li>IES\n(aka Interest subvention scheme) came to effect in April 2015. This scheme aims\nto facilitate pre and post-shipment export credit in domestic currency. <\/li><li>The\nscheme facilitates 5 per cent interest support to MSME industries and 3 per\ncent support to all exporters in respect of the identified 416 tariff lines.<\/li><li>This\nscheme is introduced and regulated by the Reserve Bank and other designated\nbanks. <\/li><li>Banks\npass on the benefit of lower interest to the exporters and then claim a\nreimbursement from the Reserve bank. <\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">NIRVIK Scheme<\/h3>\n\n\n\n<ul><li>The\nExport Credit Guarantee Corporation of India rolled out the NIRVIK scheme to\nfacilitate higher insurance cover, lower premiums for small exporters, and a\nuser-friendly claim settlement process. <\/li><li>It\ntypically serves as an insurance cover guarantee scheme that renders a coverage\nup to 90 per cent of principal and interest as against the prevailing credit\nguarantee of only up to 60 per cent loss. The cover shall encompass the pre and\npost-shipment export credit.<\/li><li>This\nscheme shall ensure that the overseas and rupee credit interest rate shall\nremain below 4 per cent and 8 per cent, respectively. <\/li><li>This\nscheme is launched by ECGC Ltd, a wholly-owned department of the Ministry of\nCommerce and Industry.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Conclusion<\/h2>\n\n\n\n<p> An availability of proper credit schemes has prevented Indian exports to touch its real potential for years.\u00a0 GOI launched these Export Promotion Schemes to patch export loopholes by incentivizing exporters.\u00a0  <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our Article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/duty-credit-scrips-for-indian-exporters\/\">Duty Credit Scrips for Indian Exporters: Explained\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>As you know, export plays a significant role in the nation&#8217;s economic development. The increasing inward foreign remittance is beneficial for the nations as it helps in creating more jobs and keeps the nation in healthy financial state. Henceforth, India needs to improve its export capabilities through the introduction of various Export Promotion Schemes. India [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":41017,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[165],"tags":[2175],"acf":{"service_id":"16"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":18684,"readingTime":9,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/41014"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=41014"}],"version-history":[{"count":11,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/41014\/revisions"}],"predecessor-version":[{"id":41026,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/41014\/revisions\/41026"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/41017"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=41014"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=41014"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=41014"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}