Export Incentives in India
To increase the exports from the country and to gain expertise in producing high quality of the goods and services Government encourage exporters to export more to increase Jobs in the country and to raise the standard of living.
The Government of India launched export promotion schemes under Foreign Trade Policy which aims to make Indian Goods/Services Cost Competitive in the Global Market, including various incentive schemes and Authorizations for Importers to save import Duty. The Government Schemes are designed in such a way that it provides the solution at every stage of exporting goods and services.
Export promotion schemes addresses the problems related to following – Financial Assistance& Insurance for Exporters:-Interest EqualisationScheme provide pre and post shipment export credit to exporters in rupees, and the Government introduced NIRVIK Scheme to provide enhanced insurance cover and reduce premium for the small exporters.
At Production Stage:-There are the Duty exemption schemes under which inputs required to manufacture export goods can be imported without paying customs duty and Duty Remission schemes give the refund of all the taxes paid in the process of the manufacturing on the export goods. Transport:- Transport Marketing Assistance Scheme is the initiative for the expansion of the Agricultural sector to reduce the transportation charges.
Export Incentive Schemes:-The Government is giving incentives on the notified goods or services to offset infrastructure inefficiency and associated costs involved into the export process. Export incentive scheme such as MEIS Scheme/SEIS Scheme/RoDTEP Scheme/PLI Scheme was introduced under foreign trade policies.
GST Concessions:-There are two ways export can be done under GST –
1) Exportunder LUT Bond: Exports are done without paying IGST under LUT.
2) IGST Refund: IGST paid on the exports can be refunded by filling application with the help of shipping bills and other supporting documents. Technological Upgradation:- License issued underEPCG Scheme to allow the duty free import of Capital goods/Machinery for technology upgradation with the condition to fulfill the export obligation.
For Ease of doing business:- SEZ Scheme/EOU Scheme/EHTP Scheme /STP Scheme/BTP Schemes introduced to provide the competitive environment for the exports to the companies engaged in 100% export and the application can be done online under the given schemes. In this article we will understand Each Government Scheme in detail, the diagram given below categorize the export promotion Schemes in the following category –
Export Incentive Schemes
Duty Exemption Scheme
Duty Remission Scheme
Export Incentive Schemes in India:- To Promote the exports from the Country Government introduced Export Incentive Schemes which provide the Benefits on notified goods and services in the form of transferable Duty Credit Scrips, which can be used to waive of the import duty or it can be sold in the Market at discounted rate of the face value of scrips. Merchandise Exports From India Scheme (MEIS) :- Merchandise Exports From India Scheme (MEIS) is the Government Incentive Scheme introduced in the Foreign Trade Policy 2015-20 as new schemes replacing earlier schemes present in Foreign Trade Policy 2009-14.It was in effect from 1st April 2015. The aim of MEIS Scheme is to offset infrastructural inefficiencies and associated costs involved in export process. MEIS Scheme was launched to give benefits of 2% – 7% of the FOB value of eligible exports in the form of Duty Credit Scrip to the goods exporters ,Manufacturer exporters &Merchant exporters who are in export of goods can apply for MEIS benefits Government of India approved RoDTEP Scheme which replaced existing MEIS Scheme and RoSCTL Scheme in a phased manner.
Rebate of Duties or taxes on the export products (RoDTEP) Scheme:- RoDTEP stands for Rebate of duties or taxes on the export products, is a incentive scheme launched on 13th March 2020 by the Government. The Union cabinet of India approved the discontinuation of MEIS Scheme and replaced MEIS Scheme with RoDTEP Scheme which will be implemented in a phased manner, that means the when the benefits rate under RoDTEP will be notified for a product at the same time MEIS Benefits shall be discontinue for that specific product. It may come in effect from April 2021 and will be in effect till 31st March 2025.
Service Exports From India Scheme (SEIS)
Service From India Scheme(SEIS) is the Government Incentive scheme launched in foreign Trade Policy 2009-15. Objective of the scheme is to promote exports of notified services from India. It came in effect on 1st April 2015 and will be in effect for 5 Years.Like MEIS Scheme, Duty Credit Scrip is issued as reward under SEIS Scheme which is transferable and having the validity of 24 months from date of issue. Eligibility criteria under SEIS Scheme: Service Provider Should have active IEC (Import Export Code). Service Exporter should have minimum net free foreign exchange earnings of US$15,000 in the year of rendering the services for the Pvt. Ltd. , Partnership or LLP company. And for individual or proprietorship such minimum net free foreign exchange earnings criteria would be US$10,000.
Production Linked Incentive (PLI) Scheme:- PLI Scheme a financial incentive scheme which was introduced on 1st April 2020 by the IT ministry as a part of the National Policy on electronics for large scale electronics manufacturing. Under PLI Scheme benefits of 4% to 6% on incremental sales of electronic products including Mobile phones and electronic components, It is applicable from 1st August 2020 and will be in effect for 5 years. The Government has allocated Rs 40,951 crore for the incentive for 5 years. Objective of the scheme is to develop Mobile Manufacturing ecosystem in India. Years Incentive allocated for each year 1st Year Rs 5,334 Cr 2nd Year Rs 8,064 Cr 3rd Year Rs 8,425 Cr 4th Year Rs 11,488 Cr 5th Year Rs 7,640 Cr
Duty Exemption Schemes:-Duty Exemption Schemes are introduced to import inputs and the capital goods at zero custom duty to manufacture the export goods. The diagram given below shows the type of duty exemption schemes
Advance Authorisation (AA) Scheme:- Under Advance Authorisation Scheme Advance License is issued to allow duty free import of inputs which are required to produce export products and Export Obligation (EO) is set as condition for issuing Advance License. Duties like Basic Custom Duty, Additional Custom Duty, Educational cess, Anti dumping duty, Safeguard duty, Integrated tax & compensation cess are exempted on the inputs imported. There are four methods to apply for Advance License – Standard Input Output Norms (SION) notified Self-declaration: Application prior to fixation of the norm by the Norms Committee: Self Ratification Scheme Advance License can be issued to a Manufacturer exporter or a Merchant exporter tied to a supporting manufacturer.
Export Promotion Capital Goods Scheme (EPCG):- EPCG Scheme allows import of capital goods for preproduction, production, post production at zero custom duty to manufacture the export products. Any Exporter having an IEC Code and intending to import/domestically procure machinery for the production of the export products is eligible for the EPCG Scheme.
Duty Remission Schemes:- Duty Remission Schemes enables post export remission of duty on the inputs used in export products. Duty Drawback Scheme and RoSCTL Schemes are the type of Duty Remission Scheme. Below is the explanation given for both the Scheme. Duty Drawback Scheme:- Duty Drawback scheme is administered by Department of Revenue (DIR), under Duty Drawback Scheme goods obtained from duty paid raw materials are exported first and after which refund can be claimed and there are two ways to claim a refund under this scheme: 1) All Industry rates 2) Brand rates. RoSCTL (Rebate of State and Central taxes and levies) Scheme:- The Rebate of State and Central taxes and levies scheme was introduced to provide the benefits to the exporters of readymade garments and made ups in March 2019 by Ministry of Textiles in the form of transferable Duty Credit Scrips offered on the basis of the FOB Value of the exports Other Schemes:- Apart from Export incentive Schemes The Government is providing the financial support infrastructure facilities are given to the exporters from time to time for export promotion. The Diagram given below gives the classification of other schemes.
Status Holder Certificate:- Status holder Certificate or export house certificate issued by the DGFT to the Indian exporters after achieving a certain level of export performance, it is given under one star, two star, three star, four star, five star certificate after fulfilment of minimum export condition. Exporters having valid IEC & good export performance may apply for status holder Certificate to boost the Marketable export efficiency.
Transport and Marketing Assistance Scheme (TMA Scheme):- TMA was launched to makeIndian agricultural products competitive in the global market by reimbursing the freight cost up to a certain amount, It is applicable to the products covered under chapter 1 to 24 under FTP and came in effect from 01/03/2019.
MDA/MAI/TEE Scheme:- Market Development Assistance (MDA) Merged into the Market Assistance Initiative Scheme. It was launched on 16th February 2018 to provide the financial supports are provided to the eligible agencies for Market Access Initiatives including the following – Direct/Indirect Marketing Market research Export promotion Branding in new markets Towns of Export Excellence (TEE Scheme) Under TEE Scheme towns producing the goods worth of Rs. 750 crores or more are notified as towns of export excellence for potential growth in exports.
EOUs/EHTPs/STPs/BTPs:- These schemes are providing the favorable ecosystem to the companies which are engage in 100% export. Units which are registered under EOUs get the following benefits – No import duty while procuring raw materials and capital goods. Faster custom clearance.
Interest Equalization Scheme:- Interest Equalization Scheme was launched by the Government to provide pre and post shipment export credit to the exporters, Under IES Scheme 5% Interestsupport given to all manufacturers and 3% support to all Merchant exporters.
NIRVIK Scheme:- NIRVIK Scheme introduced by The Export Credit Guarantee Corporation of India to provide enhanced insurance cover and reduce premium for small exporters and a simplified claim settlement process.