Export Promotion Measures Adopted In India

By Author: Preetam U. Revankar
Total Articles: 5
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Export promotion measures (EPMs) are a set of measures and practices aimed at directly or indirectly supporting export. Export promotion programs are government funded or subsidized public policy, attempts to increase the total value of export sales of business firms. The export promotion system in India has been the result of a long process of evolution initiated mainly during 1960s when a number of export promotion measures have been introduced. Following are the promotion schemes/incentives introduced in India:
1. Merchandise Exports from India Scheme (MEIS Scheme): This is designed to provide rewards to exporters to offset infrastructural inefficiencies and associated costs like payment of basic customs duty, additional duty and payment of central excise duty. MEIS was introduced in the Foreign Trade Policy (FTP) for the period 2015-20.
2. Rebate of Duties & Taxes on Export Products (RoDTEP Scheme): RoDTEP is a new scheme to replace the existing MEIS scheme for the exports of goods from India, which aims to reimburse the taxes and duties incurred by exporters such as local taxes, coal cess, mandi tax, electricity ...
... duties and fuel used for the transportation, which are not exempted or refunded under any other existing scheme.
3. Rebate on State and Central Taxes and Levies Scheme (RoSCTL Scheme): This scheme is applicable only to the Apparels and made-up Industry. It gives a refund of State and Central Taxes and Levies such as VAT on transportation fuel, Captive Power, Mandi Tax, Electricity Duty etc.
4. Service Export from India Scheme (SEIS Scheme): This reward scheme is to promote the export of services from India. SEIS Scheme was introduced on 1st April 2015 for 5 years under the Foreign Trade Policy of India 2015-20.
5. Advance Authorization Scheme (AAS Scheme): Advance License Scheme was introduced to allow duty free import of raw materials required for the production of export goods.
6. Duty-free Import Authorization (DFIA Scheme): The purpose of this scheme is the same as the Advance License Scheme i.e to allow duty free import of raw materials. It means duty free imports are allowed only after the export is made.
7. Duty Drawback Scheme (DBK Scheme): It is a refund of the duties given by the Government. In the DBK Scheme, duties of customs and central excise that are chargeable on imported and indigenous materials used in the manufacture of exported goods are refunded back.
8. Export Promotion Capital Goods Scheme (EPCG Scheme): The objective of the EPCG Scheme is to facilitate the import of capital goods/machinery for producing quality goods & services and enhance India’s manufacturing competitiveness.
9. Transport & Marketing Assistance Scheme (TMA Scheme): This scheme came into effect from 01/03/2019 and it was introduced only for the agricultural export products.
10. Star Export House/Status Holder Certificate: This is not a financial incentive scheme, but a kind of recognition/certification given by the Government of India to eligible exporters. Status holders are regarded as business leaders who have successfully contributed to India’s foreign trade.
11. Market Access Initiative Scheme (MAI Scheme): The objective of this scheme is to play a catalytic role in promoting exports from India by exploring new markets and supporting all the export promotion activities in the new markets.
12. Towns of Export Excellence Scheme (TEE Scheme): Towns exporting goods worth more than Rs. 750 crore and having high export potential are notified as Towns of export excellence (TEE). Financial assistance is provided to recognized associations in those towns as per the guidelines covered under the Market Access Initiative (MAI Scheme).
13. Interest Equalization Scheme (IES Scheme): IES also known as Interest Subvention Scheme was introduced in April 2015, to provide pre-shipment & post-shipment export credit to exporters in rupees.
14. NIRVIK Scheme: It is primary an insurance cover guarantee scheme that provide a cover of up to 90% of principal and interest as against the current credit guarantee of only up to 60% . The insurance cover will include both the pre-shipment & post-shipment export credit.

Government is encouraging and promoting Indian exports and initiates suitable interventions form time to time. The Production Linked Incentive Scheme (PLI) which first came up in 2020 will play a significant role in enhancing manufacturing and boosting exports in 15 product sectors to make India a major production centre for these products.
The government is working to diversify exports through a push in 12 service sectors under its Champion Services Sector initiative. Important new thrust sectors are tourism and hospitality, medical value travel, audio-visual, legal, communication, construction and related engineering, environmental, financial and education services. The efficacy of various export promotion measures has to be judged in the light of their contribution to export expansion and diversification process, solution of various export marketing problems and facilitation of export marketing operations, all with reference to the fast changing international marketing situation in the target markets as well as marketing capabilities of competing sources of supply. In this context, the government has initiated agencies like EOUs, EPZs and SEZs for export promotion.

Export-Oriented Units (EOUs)
Units that are undertaking to export their entire production of goods are known as export oriented units (EOUs). The EOU scheme was introduced in 1981 to boost exports, increase earnings of foreign exchange and generate employment in the country. It adopts the same production regime but offers a wide option in locations with reference to factors like source of raw material, ports of export, locality facilities, availability of technological skills, existence of an industrial base and the need for a larger area of land for the project. As on 30th September 2021, 1650 units are in operation under the EOU scheme.
Export-Oriented Units project must have a minimum investment of Rs. 1 crore in plant and machinery and are required to export 100% of their products unless they sell a portion of it to domestic tariff area (DTA). EOUs are licensed to manufacture goods and export within a bonded period of 5 years. This condition does not apply for software technology parks, electronics hardware technology parks and biotechnology parks. Further to this the minimum investment criteria is not applicable to EOUs involved in handicrafts, agriculture, animal husbandry, information technology, services, brass hardware and handmade jewellery.
Initially, EOUs were mainly concentrated in textiles and yarn, food processing, electronics, chemicals, plastics, granites and minerals/ores. But as of 2022, EOUs have extended their area of work which includes manufacturing, servicing, development of software, trading, repair, remaking, reconditioning, re-engineering including making of jewellery (gold, silver, platinum) and their articles, agriculture including agro-processing, aquaculture, animal husbandry, bio-technology, floriculture, horticulture, pisiculture, viticulture, poultry, sericulture and granites.

Export Promotion Zones (EPZs)
Export Processing Zone, is a special economic zone where Export and Import of goods are allowed without any restrictions. EPZ offers Export-Import oriented units many facilities and incentives for promoting exports from country. It was established in the year 1980 under Export Processing Zones Authority Ordinance, 1980. The main objective of establishing EPZs is to promote export-oriented industrialization and to provide an environment that is conducive to the establishment and growth of Export Processing Enterprises. The other objectives include creating employment opportunities, generating foreign exchange earnings, promoting technological up-gradation and improving productivity in EPZs. India was one of the first in Asia to recognize the effectiveness of the Export Processing Zones (EPZs) model in promoting exports, with Asia’s first EPZ set up in Kandla, Gujarat, in 1965.

Special Economic Zones (SEZs)
According to Govt. of India’s policy, SEZ’s can be set up for the manufacture of goods and the rendering of services, production, processing, assembling, trading, repair, remake, reconditioning and re-engineering.
The EXIM policy 2000 scheme, all the 8 pre-existing EPZs were converted into SEZs, located at Kandla and Surat (Gujarat), Santa Cruz (Maharashtra), Cochin (Kerala), Chennai (Tamil Nadu), Visakhapatnam (Andhra Pradesh), Falta (West Bengal) and Noida (Uttar Pradesh). According to Ministry of Commerce & Industry (Press release of 12th January 2023), while correcting the shortcomings of the EPZ model, some new features were incorporated in the SEZs policy announced in April 2000. They are means to promote exports and economic development by providing quality infrastructure, reducing procedural hassles. The important features of the SEZ scheme are:
1. They are specifically delineated duty free enclaves, deemed as foreign territory for the purposes of trade operations and application of duties and tariffs.
2. No licence required for import made under SEZ units.
3. 15 year corporate tax holiday on export profit – 100% for initial 5 years, 50% for the next 5 years and up to 50% for the balance 5 years equivalent to profits ploughed back for investment.
4. Duty free import or domestic procurement of goods for development.
5. Exemption from customs duty on import of capital goods, raw materials, consumables, spares, etc.
6. Exemption from payment of Central Sales Tax on the sale or purchase of goods, provided that, the goods are meant for undertaking authorized operations.
7. Exemption from payment of Service Tax.
8. Full freedom for subcontracting.

Performance of SEZs
After notification of SEZ Rules in February 2006, Department of Commerce has granted 425 formal approvals for setting up SEZs, out of which 358 have been notified. The performance of SEZs can be analyzed under the following heads (Annual Report 2021-22)
1. Employment generation out of the total employment provided to 25,60,286 persons in SEZs as a whole 24,25,582 is incremental employment generated after February 2006. This is apart from millions of man days of employment generated by the developers for infrastructure activities.
2. Physical exports from the SEZs have been reported Rs. 7,59,524 crore in 2020-21. There has been overall growth of export of 3,225% over past 16 years (2005-06 to 2020-21). The exports from SEZs have been significantly higher than the overall export growth of the country.
3. The total investment in SEZs till 30th September 2021 is Rs. 6,28,565 crore including Rs. 5,92,845 crore in the newly notified SEZs set up after SEZ Act 2005. 100% FDI is allowed in SEZs through automatic route.

Strengthening of SEZs
It is suggested that greater delegation of power to local authorities is necessary for the success of SEZs and can survive only based on their uniqueness and attractiveness. The revamped policy for SEZs is in the process of formulation to be called Development of Enterprise and Service Hubs (DESH). It is aimed at addressing the skewed profile of India’s existing SEZs, offer stable, predictable and transparent fiscal regime, attract large scale foreign investments, generate employment and leverage foreign trade as a catalyst for India’s industrial transformation. Development hubs will be allowed to sell outside the demarcated area or in the domestic market, with duties only to be paid on the imported inputs and raw materials instead of the final products. The DESH must identify the sectors of opportunities for global trade which are engineering, electronic and electrical automobiles, pharmaceuticals and plastics. It is cautioned that the proposed DESH should not become another policy document but a means to make India among the top five exporters of the world. The DESH should work on twin objectives of substituting imports and stimulating exports.

MBA Graduate, working as a Assistant Professor in Management Department at R L Law College, Belagavi, Karnataka, . Having a 9 years teaching experience in various subjects like International Business, Entrepreneurship Development, Business Environment, Business Communication, Production And Operations Management and Business Statistics.