The Indian government has launched various export incentives to promote more and more Indian exports in the international market.
The import-export industry of India is huge. There are a lot of traders and exporters who are dealing with international trade via different sources, especially e-commerce.
India witnessed a major slowdown in global trade during the two consecutive years of lockdown due to the global pandemic Covid-19.
Therefore, with the new foreign trade policy in 2023, more export promotion incentives have been introduced by the Indian government to grow Indian exports globally. The export initiatives motivate our Indian exporters to grow competitiveness among them.
Working On Export Incentives in India
Export initiative schemes provided by the Indian government are economic aid or support given to Indian traders. It includes export cost reduction, tax exemptions, government finance ads, relief in export obligation cases, etc.
Export initiatives enable exporters to enjoy a reduction in overall export costs. This allows our Indian traders to set competitive prices in the targeted international markets.
The government export initiatives must comply with the World Trade Organisation (WTO). It is an association that monitors all the world trade practices, ensuring that each trade happens legally and ethically.
What are the various export incentives launched by the Indian government?
Let us now discuss the various export incentives in India that the Government of India has introduced that offer great benefits to Indian exporters.
SEIS – Service Export from India Scheme
This is one of the most popular schemes the Government of India introduced. This was mainly implemented to provide support to exporters dealing with notified services.
The SEIS export initiative states that service-providing exporters must benefit from 3% to 7% of the total foreign exchange earnings.
The exporter willing to avail of this scheme must have an IEC (Import-Export Code), which is active, and have an overall foreign exchange earning of $15000. It can be transferred from one exporter to another. Exporters can submit their applications on the DGFT Portal.
MEIS – Merchandise Exports from India Scheme
The Merchandise Exports from India scheme is an initiative implemented for exporters who export notified goods and products to the notified markets and gain duty credit scrips that are transferable within the FOB.
The duty credit scrips gained through this export incentive can be accessed while paying customs duties or central excise duties on various imports. Exporters dealing in the e-commerce business are also eligible to enjoy the benefits provided by the MEIS Scheme.
But, the MEIS scheme was recently stopped by the DGFT. WTO stated that this scheme violated the WTO rules and regulations. A new scheme called the RoDTEP scheme has been implemented instead of the MEIS scheme.
The DGFT has also stated that no MEIS scheme claim will be accepted for exporters who have collected their import-export code (IEC) after 1st September 2020.
EPCG – Export Promotion Capital Goods Scheme
The EPCG scheme has been launched explicitly for capital goods. This export incentive introduced by the Government of India states that capital goods or manufacturing goods can be imported at 0% customs duty.
This export incentive scheme, called EPCG, is also known as Zero Duty EPCG. The main motive is to promote importing goods to the country. The Export Promotion Capital Goods (EPCG) scheme also includes an export obligation (EO). The EPCG scheme is applicable in integrated GST and IGST cases.
This scheme provides great benefits to Indian exporters willing to export technical products, electronic goods, pharmaceutical products, textiles, chemicals, leather products, etc.
RoDTEP – Remission of Duties & Taxes on Exported Products Scheme
The RoDTEP scheme has been introduced as a replacement scheme for the MEIS scheme.
This scheme was introduced in December 2020. The government has introduced the RoDTEP scheme due to the complaint registered against India in the USA by the World Trade Organisation (WTO). This scheme received approval from the cabinet body on 13 March 2020 and came into force on 1 January 2021.
The RoDTEP Scheme provides a refund to the Indian exporters for embedded central, state, or local duties and taxes which were not being rebated under any of the existing schemes. This scheme eliminates all the taxes for the Indian exporters that exported the goods or products.
AAS – Advance Authorization Scheme
The Advance Authorization Scheme, popularly known as AAS, is a duty exemption scheme or export incentive introduced by the Indian government. The Advance Authorization export initiative enables the duty-free import of the raw materials required to produce the final goods or products.
The AAS export incentive in India provides almost 15% of value addition to the finished goods or products. The Advance Authorization license holders are eligible to import the raw materials required for making the finished goods at zero customs duty.
The major goal behind establishing the AAS export incentive was to strengthen the competitiveness of our exporters indulged in foreign trade. The Advance Authorization Scheme can also be availed per annum as per the requirement of exporters. But, this option applies only to the ‘star holder’ certificate owners.
RoSCTL – Rebate on State and Central Taxes and Levies Scheme
The RoSCTL scheme is an export incentive designed exclusively for garment and apparel exports from India. It was initiated in the year 2019, and it applies to all readymade garments and apparel.
The Indian exporters need to have a shipping bill, the digital signature of the DGFT, and a valid Registration cum Membership Certificate (RCMC) to enjoy the advantages provided by the RoSCTL export incentive in India. Also, another important thing that you must know about this scheme is that an exporter must return the RoSCTL scheme benefits with an additional 15% interest per annum if the sales procedures are realised after the set period.
Export House Certificate
The FTP of India aims to make foreign trade procedures easy for importers and exporters. The Export House Certificate is an export initiative meant to encourage more and more Indian exports. It helps exporters to stay motivated and contribute to the development of India’s import-export industry.
Export House Certificate is an export incentive scheme in India provided to Indian exporters who have achieved great heights in the field of export and have mainly contributed to the country’s economy. This benefit is given to all exporters with an IEC and exporting various products and services to foreign markets.
EOU – Export Oriented Units Scheme
This is an export incentive scheme by the Indian government that aims to promote the country’s exports by diminishing and offering some relief in tax payment and compliance.
A complete export-oriented unit refers to an industrial area that exports all its final goods, apart from the permitted levels of domestic tariff area sales for producing the product. This involved everything starting from the repairing to the rendering of services.
MAI – Market Access Initiative
MAI is a unique scheme focusing on exploring new markets and organising promotional activities to boost Indian exports to foreign countries. The Export Promotion Council of India offers the benefits of this MAI scheme.
TMA – Transport and Marketing Assistance
It is a scheme developed by the Directorate General of Foreign Trade (DGFT) to enhance the country’s agricultural exports. It is an export initiative that focuses on providing reimbursement to exporters. The TMA scheme offers the traders some portion of their overall transportation cost, called freight cost in the import-export industry.
All exporters with agricultural export businesses are eligible to apply for this initiative. However, they must be registered with the Export Promotion Council of India.
Conclusion
The DGFT and the Ministry of Trade and Commerce have introduced various export promotion incentives. Still, exports are a challenging task in the country. It is because many exporters need to gain proper knowledge about the import-export industry.
In this post, we have discussed the major export initiatives implemented by the Indian government to help increase the country’s overall exports.
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