MODULE 09: EXPORT PROMOTION IN INDIA

❖ INTRODUCTION

• Export trade is an engine for the economic growth of the country. Therefore, all the countries
take keen interest in export promotion. Government of India has taken several steps since
independence in this respect. India is continuously trying to develop infrastructure in the
country to help exporters.
• The term export promotion includes various measures, incentives and assistance given to the
exporter after analyzing the situation and studying the environment. It is one of the important
aspects of export trade policy of the country.
• We cannot expect growth of export without systematic and planned export promotion
measures. India has introduced various measures since independence.
• EXIM policies refer to government regulations and strategies governing international trade,
encompassing export promotion, import regulations, customs duties, and incentives.
• The objectives include: Encouraging exports, restricting imports for safeguarding domestic
industries, facilitating trade, and maintaining a favourable balance of payments.
• EXIM policies are managed and implemented by Directorate General of Foreign Trade
(DGFT).

❖ FOREIGN TRADE POLICY (2015-2020)

FTP 2015-20 introduces two new schemes, namely ‘Merchandise Exports from India Scheme
(MEIS)’ for export of specified goods to specified markets and ‘Services Exports from India
Scheme (SEIS)’ for increasing exports of notified services.

1. SEIS

• A scheme designed to provide incentive to exporters to offset infrastructural

inefficiencies and associated costs.
• Under SEIS, Service providers of notified services will be eligible for rewards in the
form of duty credit scrips @ 5% and 7% on the net foreign exchange earned from
notified services.
• The duty credit scrips can be utilised to pay customs duties on import of inputs or
goods, safeguard duty, anti-dumping duty and any other customs duty under FTP
2015-20.

2. MEIS

• MEIS intends to incentivise exports of goods manufactured in India or produced in

India. The incentives are for goods widely exported from India, industries producing
or manufacturing such goods with a view to making Indian exports competitive.
• The incentives under the schemes are calculated as a percentage, which is 2%, 3% or
5% of the realised FOB (free-on-board) value exports in free foreign exchange or
FOB value of exports as per shipping bills in free foreign exchange.
• The incentives are allotted through a MEIS duty credit scrip.
 • The duty credit scrips can be utilised to pay customs duties on import of inputs or
goods, safeguard duty, anti-dumping duty and any other customs duty under FTP
2015-20.

❖ SPECIAL ECONOMIC ZONES (SEZs)

• Special Economic Zone (SEZ) is a specifically delineated duty-free enclave and shall be
deemed to be foreign territory for the purposes of trade operations and duties and tariffs.
• The idea was to promote exports from the country and realising the need that level playing
field must be made available to the domestic enterprises and manufacturers to be competitive
globally.
• The main objectives of the SEZ Act are:

➢ Generation of additional economic activity.

➢ Promotion of exports of goods and services.
➢ Promotion of investment from domestic and foreign sources.
➢ Creation of employment opportunities.
➢ Development of infrastructure facilities.

• The SEZ rules provide for:

➢ Simplified procedures for development, operation and maintenance of the SEZs and
for setting up units and conducting business in SEZs.
➢ Single window clearance for setting up of an SEZ
➢ Single window clearance for setting up a unit in a SEZ
➢ Single Window clearance on matters relating to Central as well as State Governments
➢ Simplified compliance procedures and documentation with an emphasis on self-
certification

• Facilities and incentives under SEZ include:

➢ Duty free import

➢ No routine examination by customs authorities of export/import cargo.
➢ 100% Income Tax exemption on export income for SEZ units under Section 10AA of
the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the
ploughed back export profit for next 5 years.
➢ Exemption from GST and supplies to SEZs are zero rated under IGST Act, 2017.
➢ Single window clearance for Central and State level approvals.

❖ EXPORT OREINED UNITS (EOU)

• The Export Oriented Unit (EOU) Scheme started in 1981 to promote exports and thus
increase net foreign exchange earnings.
• Export-oriented units are units undertaking to export their entire production of goods. EOUs
can engage in manufacturing, services, development of software, repair, remaking,
reconditioning, re-engineering including making of gold/silver/platinum jewellery and
articles.
• EOUs enjoy the following benefits:
 ➢ EOUs has a permit to procure raw material or capital goods duty-free, either through
import or through domestic sources;
➢ EOUs are eligible for reimbursement of GST;
➢ EOUs are eligible for reimbursement of duty paid on fuels procured from domestic oil
companies;
➢ EOUs are eligible for claiming input tax credit on the goods and services and refund
thereof;
➢ Fast track clearance facilities;
➢ Exemption from industrial licensing for the manufacture of items reserved for SSI sector.

• Eligibility criteria for EOU:

➢ For the status of EOU, the project must have a minimum investment of Rs.1 crore in plant
and machinery.
➢ This condition does not apply for software technology parts, electronics hardware
technology parks and biotechnology parks.
➢ Further, EOU involved in handicrafts, agriculture, animal husbandry, information
technology, services, brass hardware and handmade jewellery does not have any
minimum investment criteria.

❖ ELECTRONICS HARDWARE TECHNOLOGY PARKS (EHTPS)

• The scheme focuses on promoting entrepreneurs in setting up Hardware Technology Parks

anywhere in India to export their produced electronics goods. Several benefits and assistances
are provided under the export-oriented scheme to enhance the production and export of
electronics goods and services.
• Objectives of the scheme include:

➢ To encourage entrepreneurs in establishing Electronic Hardware Technology Parks in

India (EHTPI)
➢ To enhance the production and exportation of electronics goods and services
➢ To increase the revenue of the country with the capital investment from foreign
entrepreneurs
➢ To generate more employment opportunities

• Benefits under the scheme include:

➢ The scheme encourages foreign investment and provides provision for 100% Foreign
Equity investment through automatic route
➢ Capital goods, raw materials, components and other such goods can be procured and
imported with Duty-free services under the scheme
➢ As per the provisions Under Section 10A/10B of Income Tax Act, the eligible
entrepreneurs can obtain the Income Tax exemption from the export profits.
➢ The EHTP units are discharged from the payment of corporate income tax for five years
in the first eight years of its commercialisation.
➢ EHTP units can get 100% Foreign Equity benefits under the scheme.
➢ The units can import all the goods required for the manufacturing from bonded
warehouses in the Domestic Tariff Area (DTA) for Duty-free under the Export-Import
(EXIM) Policy.
➢ Entrepreneurs can claim Refundable Central Sales Tax for their units.
 ➢ Approvals are provided under the single window clearance system
➢ Outsourcing between EOU/STP/EHTP/EPZ is approved under the scheme.
➢ CST charges paid by the entrepreneurs can be reimbursed under the scheme.

❖ SOFTWARE TECHNOLOGY PARKS (STP)

• The Software Technology Park (STP) Scheme is a 100 percent Export Oriented Scheme for
the development and export of computer software, including export of professional services
using communication links or physical media.
• For implementing the STP scheme, the Ministry of Communications and Information
Technology formed the Software Technology Park of India (STPI) in 1991.
• STPI is an autonomous body for the management and regulation of IT Parks or STPs in India.
The main aim of STPI is to develop India into an IT giant and one of the leading generators
and exporters of IT and software within the coming few years. STP scheme approvals are
given under a single-window clearance mechanism.

❖ EXPORT HOUSES

• Export house is mostly home-based organization, located in the manufacturer’s country,

which is involved in the export of products that the manufacturer has produced.
• These export houses carry out most of the export-related activities overseas, via their own
agents and distributors who are in place in the country where the product is being exported.
• Export houses, trading houses, star trading houses, and superstar trading houses are types of
export-oriented organizations that are recognized by the Government of India. These
organizations are classified based on their export performance and are entitled to certain
benefits and incentives provided by the government.
• The level of export performance for the purpose of recognition shall be as per the table below:
❖ GIFT CITY

• Gujarat International Finance Tech-City (GIFT City) is a business district currently being
constructed in the state of Gujarat. GIFT City is India’s first operational smart city with the
development of world-class infrastructure and sustainable master planning, which will make
GIFT at par or above par with renowned centres like London, Shanghai, New York, Hong
Kong, Singapore, Dubai, etc.
• Promoted by the state government of Gujarat as a greenfield project, it will include
commercial and residential complexes.
• GIFT City has a dedicated multi-services Special Economic Zone (SEZ) for International
operations for various services sector players.
• Also, GIFT multi-services SEZ has the status of India’s first International Financial Services
Centre (IFSC) approved by the Government of India.
• The establishment of IFSC in India is expected to increase employment opportunities,
thereby, enhancing economic activity and revenue generation.
• GIFT City provides a business platform and creates ecosystem to enable commerce, while
also providing world class infrastructure for the integrated city which also includes residential
and social developments.
• GIFT City offerings includes reduction in operational cost, conducive business environment,
attractive tax policies, better talent availability along with low attrition rate, quality of life etc.
thus making GIFT City a preferred destination for leading international and domestic
companies in the BFSI, IT/ITeS and other Services sectors for setting up their operations.