The various Measures that are taken for Promotion of Exports in India are as follows:
1. Duty Drawback. The manufacturer would have paid duties for a product export from India as under: (1) Import duties on raw materials and components imported; and (ii) Excise duty on the items manufactured in India. The Customs and Central Excise Duty Drawback Rules, 1971 provide for refund of such duties to the exporter on the export being completed. Duty drawback is allowed only in respect of all items wherein such raw materials and components have been used on which duty either of customs or excise has been paid. There are two types of rates of duty drawback: (i) all-industry rate, and (ii) brand rate.
All industry rate is applied to all exporters alike. The brand rate is applicable only to particular manufactures. The brand rate is fixed on application and furnishing of information to the authorities by the exporter. Brand rate can be so fixed where the all-industry rate does not exist, or where the existing rate of drawback is less than 80% of the duty paid.
2. Duty Exemption Scheme. The scheme enables the exporter to import materials without payment of customs duty. The licence issued under this scheme is known as ‘Advance Licence’. The items allowed to be imported under these licences are such as are to be used in the manufacture of goods to be exported from India. The advance licences are issued to manufacturer-exporters subject to actual user condition. Generally, the scheme is applicable only to those export products —in which there value addition of 33%. The licence will bear a suitable export obligations. The licensing authority issuing a licence under this scheme will also simultaneously issue a connected Duty Exemption Entitlement Certificate.
Exempt materials imported against a license under this scheme should be utilized for the manufacture of the resultant products specified in the Duty Exemption Entitlement Certificate. The license holder should execute a bond with bank guarantee and lodge it with the licensing authority. After exports, the Duty Exemption Entitlement Certificate duly completed by the customs will have to be surrendered to the licensing authority in fulfillment of the export obligation imposed. No duty drawback will be allowed on the products exported/supplied under this scheme.
3. Excise Rebate. Finished goods which are subject to excise duty for home consumption are exempt from the duty when they are exported. The scheme is also applicable where the exported goods contain excisable goods in their manufacture.
The exporter can avail of this facility in either of the following methods, where finished goods are excisable:
(i) Export under bond: Under this method, the exporter has to execute a bond in favor Central Excise Authorities. The amount of the bond will be equal to the duty on the estimated maximum outstanding of goods leaving the factory without paying the duty and pending acceptance of their proof of export by excise authorities.
(ii) Refund of duty. If the duty is already paid, after export is made, the exporter should make a claim with the Central Excise authorities. After verification of the claim, the excise authorities will arrange for the refund of the Central Excise.
Where the excisable materials have been used in the manufacture, similar to the above arrangement, the exporter can avail of the facility of manufacturing under bond or he can claim refund after the duty is paid.
4. Marketing Development Assistance. The Government of India has instituted a Marketing Development Fund for providing grants-in-aid for the development of markets for Indian products abroad, for compensatory support for export commodities and for other export promotion efforts. The fund gets its resources from the allocation of General Budget.
The fund is administered by a committee consisting of the Secretaries of the Departments of Economic Affairs and Expenditure and Commerce Various schemes (i.e. export promotion activities) falling under the grants-in-aid are processed by different sub-committees. Assistance under MDF is available to organisations like Export Promotion councils, Commodity Boards, India Trade Promotion Organisation etc., and individual exporters approved by such organisations. The extent of assistance differs depending upon the scheme. Generally it ranges between 50% and 60%.
5. Export-oriented Units/Export Processing Zone. Units undertaking to export their production of goods may be set up under the Export-oriented Units Scheme. Such units may be engaged in manufacture, production of software, horticulture, agriculture, aquaculture, animal husbandry or similar activity. Units engaged in service activities may also be considered on merit.
Free Trade Zone or Export Processing Zone is an industrial estate cordoned off from domestic tariff area, where trade barriers applicable to the rest of the economy do not apply and there export-oriented units can operate free of import duties or quantitative restrictions and are given other advantages including tax exemption. Seven free trade zones have been set up in India at Santa Cruz (Mumbai), Kandla (Gujrat), Madras (currently Chennai), Cochin, Noida (Uttar Pradesh), Falta (Kolkata), and Visakhapatnam.
Units in the free trade zone and export-oriented units (outside the zone) are similarly placed with regard to conditions and benefits bestowed on them.
An EOU/EPZ,unit can import free of duty raw materials, capital goods , equipment, etc required for production provided they are not prohibited items in the Negative List of Imports.
The Entire production EOU/EPZ should be exported except rejects up to 5% which can be sold in the domestic tariff area (DTA) subject to payment of duties. 25% of the production may also be sold in the DTA area provided the use of the indigenous inputs is more than 30% in value terms. The unit should achieve a minimum value addition of 20%; in case of units engaged in manufacture, or production of specified items higher limits are prescribed.
Application for approval as export-oriented unit should be submitted to the Secretariat for Industrial Approvals, Ministry of Industry, New Delhi. For setting up units in Export Processing Zones, application should be made to the Development Commissioner of the EPZ concerned. Supplies made to EOU/EPZ units in the domestic tariff area are treated as ‘deemed exports’ entitled for export benefits.
Benefits to Export Processing Zones
These units enjoy the following benefits:
(i) The Units set up in the EPZ are eligible for concessional rent for lease of industrial plots and standard design factory buildings/sheds for the first three years.
(ii) EOUs and EPZ units are exempt from payment of corporate income tax for a block of five years in the first eight years of operation. (iii)/Foreign equity up to 100% is permissible.
6. Export Houses, Trading Houses and Star Trading Houses. A registered exporter is a person holding valid registration certificate issued by an Export Promotion Council, Commodity Board or other registering authority designated by Government for the purpose of export promotion. The exporter may be registered as an Export House or a trading house or a Star Trading House if the Average FOB value of physical exports during the preceding three licensing years is not less than Rs. 10 crores, Rs. 50 crores and Rs. 250 crores respectively.
The registration may also be granted if the FOB value of exports during the preceding licensing year was not less than Rs. 15 crores (export house), Rs. 75 crores (trading house) and Rs. 300 crores (star trading house). These houses are entitled for special import licences for import of such items included in the Negative List of Imports, under a scheme notified in this behalf. They are also eligible for opening of foreign currency accounts in India and abroad, Marketing Development Assistance and to execute legal undertaking in lieu of bank guarantee to cover the export obligation.
7. Export Promotion Capital Goods Scheme. Under the EPCG scheme capital goods may be imported at a concessional rate of customs duty of 25% of CIF value with an export obligation of 3 times CIF value to be achieved within 4 years. The duty will be further reduced to 15% of CIF value where the export obligation undertaken is 4 times the CIF value within a period of 5 years. A manufacturer-exporter for a period not less than 3 years is eligible for this scheme. Other exporters may also be considered on merit.
8: Foreign Currency Accounts for Exporters. Exporters with net foreign earning of Rs. 4 crores and over during the preceding year may be permitted by Reserve Bank to maintain foreign currency accounts in US dollar or pound-sterling, with SBI, public sector banks and foreign banks operating in India. Only one account shall be maintained which will have no cheque facility. No overdraft can be granted in the account.
The exporter availing this facility should route all export documents through the designated branch of the bank. Credit to the foreign currency account will be on approved method of liquidation of post-shipment advances. RBI will fix a ceiling on the balance to be maintained in the account. Excess over that shall be converted into rupees promptly.
If exporters arrange foreign currency overdraft/revolving lines of credit from banks abroad for financing their imports, RBI may consider their keeping foreign currency accounts abroad. Mirror account shall be maintained by a bank in India. They cannot avail pre-shipment/post-shipment finance except to the extent of rupee expenditure.
9. Other benefits. Some of the other benefits available to exporters can now be listed.
(a) Exemption from sales tax, (b) exemption from Income tax, (c) Training facilities in India and abroad, (d) Availability of concessional finance from banks and Exim Bank, (e) Credit insurance cover from ECGC, (f) Pre-shipment inspection facilities, (g) Foreign exchange for business visit abroad and for participation in trade fairs and exhibitions abroad, and (h) Special import licences for items on the negative list.
Thus, it may be seen that no efforts has been spared in providing all possible facilities and incentives to exporters.