UNIT V

Export
Incentives
Dear MIBians
Lets discuss the aim and objectives
of export incentives ?
What are all the different type of
schemes are available ?
CASE STUDY OF INDIA
 The 1992 -97 Mantra in
India
Indias external Trade policy
[laid down the foundation of
globalization of Indian
economy].
Initiating liberalization and
making Indian industries to
face competition from foreign
MNCs
 Just EXPLORE
IMPORT is a source
to encourage
EXPORT
How to document
the statement
 Support which Indian exporters
GET
JUST see your FTP [2009-14]
EPCG[ Export Promotion Capital Goods
Scheme]
Introduced in 1992-97 EXIM policy.
To enable exporter to import capital
goods.
Export obligation !! i.e EXPORTER
required to guarantee exports of
certain minimum value, which is
multiple of the value of capital goods
imported.
 Advance Authorizations
Scheme
Allow duty free imports of
inputs, which are physically
incorporated in exports.[ in
addition fuel, oil, energy,
catalysts, which are used to
discover export products.
Up to 10% of CIF value of
authorization are allowed under
this scheme.
 Duty free import
authorization[DFIA]
DFIA is issued to allow duty
free imports of inputs, fuel,
oil, energy sources,
catalyst which are required
in export production.
This is given based on the
SION -Standard INPUT OUTPUT
norms]
 DUTY remission Schemes
Duty Entitlement Passbook [ BEPB] : is
to neutralize the incidence of customs
duty on import contents of export
product.
Here Exporter may apply for credit as a
specified percentage of FOB value of
exports.
Such credit may be utilized for payment
of customs duty on freely importable
items/ or restricted items and also on
imports under EPCG Scheme.
 What is this ?
Export promotion capital goods (EPCG) scheme of
Government of India allows import of capital
goods at concessional duty. In return company
should export some quantity of its production.
Indian company Nippon Dendro Ispat Ltd.
Imported capital goods from Taiwan. Taiwan
Company supplied the machine which
reached Mumbai without any damage. But
from Mumbai to Pune transit, the machinery
vehicle met an accident to cost to damage to
machinery. The company could not use the
machinery and could not fulfill the export order.
Therefore company will have to increase export
marketing to compensate the loss.
 DBK[ Duty Drawback Scheme]
Administered by the Directorate of
Drawback, Dept. of Revenue, Ministry of
Finance, Govt. of India, Jeevan Deep,
Parliament Street, New Delhi - 110 001.
Under this scheme: Exporters are entitled
to claim: 1. Customs duty paid on the
import of raw materials, components, and
consumables.
2. Central excise duty paid on indigenous
raw materials, components and
consumables utilized in the manufacture if
exportable goods.
 Classification of DBK
All Industry rates:
Brand rates
Special brand rates
[ Performa I,II and III]
ElGILIBILITY :
 Claiming DBK
CLAIMING advance : read
directorate manual
Execution of BOND:
Green shipping BILL:
TRIPLICATE COPY
accompanied by L/C, PACKING
LIST/ ARE-1 /insurance
cert/special brand rate.
 Excise duty refund
Excise duty is a tax by Central government on
good mfd in India. This duty is collected at
source, ie. Removal of goods from factory
premises.
Though exports goods are exempted ///
But for necessary clearance the following
methods are used:

1. export under rebate

2.Export under bond
 Rebate/ bond
Procedure for Excise Clearance under Bond / Letter Undertaking//
The procedure under this rule is similar to the one under claim for
rebate. This is governed under Rule 13.
Under this rule, there is no PLA(personal Ledger Account)
as no duty is paid. Instead of payment of duty, the
manufacturer exporter executes bond/letter of
undertaking to the amount equivalent to the excise
duty. Bond can be executed with surety or without
surety. Such a bond is to be supported by the bank
guarantee to protect financial interests of excise
department. Exporters of the following categories are
allowed to execute bond with surety and do not have to
furnish any bank guarantee or cash security.
Super Star Trading House/Star Trading House /Trading
House/Export House/ Registered Exporters (Registered
with relevant Export Promotion Council)
 Application for refund claim
Triplicate copy of the Bill of Entry / Post parcel wrapper /
shipping bill / baggage receipt / purchase invoice (as the case
may be).
2. Letter from the importer / buyer / exporter (in case the
applicant is an agent)
3. Duty Challan / other document as evidence of duty payment.
4. Signed working sheet for the amount of refund claimed.
5. Customs attested invoice and packing list.
6. Bill of Lading / Airway Bill.
7. Documents for establishing the applicants eligibility to
receive the refund amount in terms of the proviso to sub-
section (2) of Section 27 of the Act (for e.g. CA certificate),
including documents for the purposes of section 28C and 28D
of the Act. (wherever applicable).
8. Contract and Purchase Order.
9. Order-in-Original / in revision / in appeal / any other order.
(wherever applicable).
10. Short delivery certificate from custodian.
11. Short shipment certificate from supplier.
12. Survey report. (wherever applicable).
 13. Insurance claim settlement certificate. (wherever
applicable).
14. Catalogue / technical write up / literature.
(wherever applicable).
15. Bills for freight / insurance/other charges.
(wherever applicable).
16. Certificate of Origin. (wherever applicable).
17. Inventory list (for e.g. in case of refund of duty on
bunkers on reversion of a vessel to foreign-run).
18. Modvat / Cenvat credit certificate from Central
Excise authorities (for e.g. in case of refund on
account of export duty).
19. Any other document considered necessary in
support of the claim
 Central Tax Exemption
Sce.5 of CST act,1956:
Any dealer who is
registered with sales
tax authority can claim
exemption in terms of
sales made by him
outside India// for H
 What are those forms F,C ,H
and
"C" Form is issued by buyerall?
who is registered dealer. If
the buyer issues "C" form, he can purchase goods at
concessional rates in the inter-state sale. C Form can
be issued only by a registered dealer to another
registered dealer. It can be issued, generally, only in
respect of raw materials, packing materials goods
covered by the certificate of registration of the issuing
dealer.
"F" form is evidence to provide that goods are sent in
stock transfer basis and not on sale. The consignment
agent/ branch receiving is required to issue "F" form to
the selling dealer.
"H" Form is issued when the buyer buys the goods for
export. If buyer issue "H" form, the selling dealer is not
required to charge or pay any CST on the transaction
 NO TAX PAYABLE
No tax is payable under this Act on
Any transaction of sale in the course of export out of the territory of India.
[Section 5(1)].
Sale in the course of import or sale effected by transfer of document of title
to the goods before it crosses the custom frontier of India popularly
known as "High Seas Sale". [Section 5(2)]
Sale of goods to the exporter for the purpose of complying with
pre-existing export order or agreement against Form H.
[Section 5(3)]
Any subsequent sale, during inter-state movement of goods, effected by
transfer of documents is exempted if the sale is made to a registered
dealer, provided the prescribed declarations are obtained from the
supplier and the purchaser of such goods. [Section 6(2)]
Inter-State sale of goods to any foreign
diplomats/mission/consulates/United Nations, etc. against Form J.
[Section 6(3)]
Inter-State stock transfer against Form F. [Section 6A]
Sale of goods to:
(a) Developer of SEZ; (b) Unit situated in SEZ against Form I [Section 8(6)]
Sale of goods to notified persons against Form "J" [Section 8(4)]
 Exemption from service tax
Levi able only on taxable
services supplied within India
except Jammu and Kashmir /
read Export service rules
2005::: all those services
exported outside the
territory of India are
exempted from service tax
 Octroi Exemption
EXEMPTION FROM OCTROI[EXPORT ROMOTION] RULES 1976.
Every claim for exemption from Octroi under these
Rules must be supported by an application for
exemption in triplicate in form 'EP, ' annexed to
these Rules and duly filled in and signed by a
Registered Exporter or by a Custom House
Agent who may be Authorised to sign such
'EP' From under the condition of the Bond or
by a person holding power of attorney from
under the condition of the Bond or by a
person holding power of attorney from a
registered exporter, and no such application shall
be entertained unless it fulfills the following
conditions.
 Forms to be used by tax-
payers.
FormRemarksADeclaration-cum-application to pay Octroi, to be filled in by
the importer at the time of import.
( Rules 4, 6, 8 & 12 of Levy of Octroi Rules. )BImport Octroi Bill -
Receipt showing Octroi Collected.
( Rules 4, 6, 8 &12 of Levy of Octroi Rules. )C (Front)
C (Back)Octroi Export Note for use in case of export by Sea.
(Rule 4, Refund of Octroi Rules). Also in case of export by Air.CCOctroi
Export Note for use in case of export by Road.
( Rule, 29(g), Refund of Octroi Rules. )D (Front)
D (Back)Application for refund on account of export.
( Rule, II (a) Refund of Octroi Rules.) ERefund
Receipt.
[ Rule, 11 ( c ), Refund of Octroi Rules. ]
EP (Front)
EP (back)Application for exemption in
respect of articles imported for export
to Foreign Countries.
(Rule, 5-A, Export Promotion Rules. )
 FISCAL INCENTIVES
A) Exemption from Income Tax : to
promote export just dilute IT act, 1961.
Ten Year Tax holiday to newly established
industrial undertakings in FTZs,
Electronic hardware , Techno parks,
software techno9logy parks (Sec.10 A)
15 years Tax holiday for SEZ
( Sec.10AA)
10 YEARS for 100% EOUs
Wood based handicrafts ( sec. 10 B)
 Marketing Assistance
MDA- Market development Assistance
[ EPCs, commodity boards, FIEO
MAI- market Access initiative [ survey/
field study]
Supply of Raw Materials:
Indian Raw material assistance
centre
Back to back inland L/C
 Marketing Development
Assistance (MDA)
The Ministry of Commerce and
Industry has a scheme of MDA, which
was launched in 1963 with a view to
stimulate and diversify the export
trade, along with the development of
marketing of Indian products and
commodities abroad. The MDA is
utilized for: Market research,
commodity research, area survey
and research; Participation in trade
fairs and exhibitions;
 MDI..
Export publicity and dissemination of
information; Trade delegation and study
teams; Establishment of offices and
branches in abroad; Grant-in-aid to Export
Promotion Councils and other approved
organizations for the development of
exports and the promotion of foreign
trade; and any other scheme which is
generally aimed at promoting the
development of markets for Indian
products and commodities abroad.
 Market Access Initiative
The (MAI) and Industry
Ministry of Commerce has
introduced the MAI in April 2001 with the idea
that the Government shall assist the industry in
R&D, market research, specific market and
product studies, warehousing and retail
marketing infrastructure in select countries and
direct market promotion activities through
media advertising and buyer-seller meets.
Financial assistance shall be available under the
scheme to EPCs, industry and trade associations
and other eligible activities, as may be notified
from time to time. A small allocation of Rs 42
crore has been made for 2002-03.
 Central Assistance to
The
States
State Governments shall be encouraged to fully
participate in encouraging exports from their
respective States. For this purpose, a new scheme
Assistance to States for Infrastructural Development
for Exports (ASIDE) has been initiated which would
provide funds to the States based on the twin criteria
or gross exports and the rate of growth of exports
from different States. Eighty per cent of the total
funds would be allotted to the States based on the
above criteria and remaining 20 per cent will be
utilized by the Centre for various infrastructure
activities that cut across State boundaries, etc. A sum
of Rs 49.5 crore has already been sanctioned for
2001-02 and further a sum of Rs 330 crore has also
been approved for 2002-03. The State shall utilize this
amount for developing complementary and critical
infrastructure.
 Towns of Export Excellence
A number of towns in specific geographical locations
have emerged as dynamic industrial locations and
handsomely contributing to Indias exports. These
industrial cluster-towns have been recognized with a
view to maximiing their export profiles and help in
upgrading them to move up the higher value markets.
A beginning is being made to consider industrial
cluster towns such as Tirupur for Hosiery, Panipat for
Woollen Blankets and Ludhiana for Woollen knitwear.
Common service providers in these areas shall be
entitled for EPCG Scheme, funds under the MAI
scheme for creating focused technological services,
priority assistance for identified critical infrastructural
gaps from the Scheme on Central Assistance to
States. Units in these notified areas would be eligible
for availing all the Exim Policy Scheme.
 Special Economic Zones
The Government of(SEZ)
India had announced an SEZ
scheme in April 2000 to promote Indias
exports. Four Export Processing Zones (EPZ),
namely Noida (UP), Falta (West Bengal),
Chennai (Tamilnadu), and Viskhapatnam
(Andhra Pradesh) have been converted into
SEZs from 1 January 2003. There are seven
EPZs in the country. In addition, three formal
approvals and 14 in-principle approvals have
been granted for the establishment of SEZs in
private, state, and joint sectors. Policy initiatives
taken to promote SEZs include duty-free
import/domestic procurement of goods for
development
.operation and maintenance of SEZs
and SEZ units, external commercial
borrowing up to $500 million in a year
without any maturity restriction through
recognized banking channels and a
facility to set up overseas banking units
in SEZs. The SEZ units have also been
getting exemption from central sales tax
on sales made from the domestic tariff
area to SEZ units and exemption from
service tax to SEZ units and developers.
 Duty Drawback on Goods
Exported
Under this Duty Drawback scheme export
products get relief of incidence of customs
and excise duties paid on raw materials
and components used at various stages of
production. It is defined as rebate of duty
chargeable on any imported or excisable
material used in the manufacture of goods
exported from India. Duty Drawback is
admissible for exports irrespective of
mode of export, i.e. whether despatched
by Sea, Air, Land Customs or by Post.
 WOW institutions
IIFT
EPCs
EICs
Indian Council of Arbitration
FIEO
EXIM
What not
WHY DONT you present ??

Is there any special

documentation for
DEEMED EXPORTS
 DFIA [ duty free import
EOUs authorization]
Software Techno Parks
Electronic Hardware TECHNO
parks[ EHTPS]
Bio- Tech parks
Supply of goods
Supply of Infrastructure
Supply of projects
What not ??
 Hey! Deemed exporter
You enjoy
Advance authorization duty
free authorization
Deemed export drawback
Exemption from Terminal excise
duty where you deal
international competitive
bidding
TOWN of export Excellence
Why dont you
remember some right
now
Why are the called as
Town of export
excellence