Promotional Measures in Foreign Trade Policy:-
Exports are regarded as an engine of economic growth in the wake of liberalization and are also considered as structural reforms in the economy. In recent times India is witnessing a slowdown in the process of exports with its traditional partners. Under these circumstances, we thus need to set in motion strategies and the policy measures which catalyze the growth of exports in several different sectors as well as in newer markets.
1. Export Promotion Schemes:-
The Foreign Trade Policy 2015-20 and other schemes provide promotional measures in order to boost India’s exports with the objective to offset the infrastructural inefficiencies and the associated costs that are involved in order to provide the exporters with a level playing field. Brief of these measures are as under:
1.1 Exports from India Scheme:-
(i) Merchandise Exports from India Scheme (MEIS):-
Under this scheme, exports of the notified goods/ products to be notified markets as it is listed in Appendix 3B of the Handbook of Procedures, which are granted freely transferable duty credit scrips on the realized FOB value of exports in free foreign exchange which is determined at a specified rate (2-5%).
Duty Credit Scrips are thus provided for exports in order to diversify the markets and also offset the disadvantage that us faced by the exporters with regard to freight costs, transport hurdles and also other disabilities. They are like debit notes which can also be used to pay the import duties.
Such duty credit scrips thus can be used for the payment of customs duties for the process of import of inputs or goods, payment of excise duty on domestic procurement, payment of service tax and the payment of customs duties in case of EO default.
Exports of the notified goods of FOB value which are up to Rs 25, 000 per consignment, through a courier or foreign post office using e-commerce shall thus be entitled to MEIS benefit.
(ii) Service Exports from India Scheme (SEIS):-
Service providers of the notified services as per Appendix 3E are thus eligible for freely transferable duty credit scrip @ 5% of the net foreign exchange earned.
2. Duty exemption & remission schemes:-
An exporter must also take Advance Authorization (AA) from the regional DGFT offices if he uses his imported product as an input in order to manufacture his resultant exported product. No Advance Authorization can obviously be given for the import of prohibited items. Advance Authorization can, however, be given for the import of restricted items with some certain conditions. Items that are reserved for import through the State Trading Enterprises (STEs) can thus be imported against an Advance Authorization/ DFIA provided that the item of import is canalized/ bought through STEs or after obtaining No Objection Certificate from the STEs.
2.1 Advance Authorization Scheme:-
Under this scheme, duty-free import of inputs are allowed, that is thus physically incorporated in the export product (after making of normal allowance for wastage) with the minimum 15% value addition. Advance Authorization (AA) is also issued for the inputs in relation to the resultant products as per SION (Standard Input Output Norms prescribed in Handbook of Procedures Vol. II) or on the basis of a self-declaration, as per the procedures of FTP. AA normally has a validity period of 12 months for the purpose of making imports and also a period of 18 months for the fulfilment of the Export Obligation (EO) from the date of issue. AA is thus issued either to a manufacturer exporter or the merchant exporter that is tied to a supporting manufacturer(s).
2.2 Advance Authorization for annual requirement:-
Authorization holders who thus have been exporting for at least 2 years can get an annual Advance Authorization. This thus gives them the flexibility to export any product throughout the year which is falling under an export product group who use the duty exempted imports. However specific inputs are required to be tallied with the resultant exports as per SION/ prescribed ad hoc norms.
2.3 Duty-Free Import Authorization (DFIA) Scheme:-
DFIA is a variant to the Advance Authorization scheme. It is thus different from the Advance Authorization as a higher minimum value in addition of 20% is required, as it is compared to only 15% in Advance Authorization. It thus has to enable provision for the transferability of authorization or the materials that are imported against it. DFIA can also be applied and it can be obtained on post export basis as well. It is thus popular with the exporters who export first and they then obtain the Authorization, which can be sold freely.
2.4 Duty Drawback of Customs/Central Excise Duties/Service Tax:-
The scheme is thus administered by the Department of Revenue. Under this scheme, the products that are made out of duty paid inputs are first exported and there is thereafter refund of duty is claimed in two ways:
i) All Industry Rates: Are As per the Schedule
ii) Brand Rate: Are As per application on the basis of data/documents
2.5 Rebate of Service tax through all industry rates:-
Refund of service tax is paid on the specified output services which are used for the export of goods is available at specified all the industry rates.
3. EPCG SCHEME:-
3.1 Zero duty EPCG scheme:-
Zero duty EPCG scheme allows the import of capital goods for the purpose of pre-production, production and post-production (including Completely Knocked Down/ Semi Knocked Downthereof as well as computer software systems) at zero Customs duty, which is subject to an export obligation which is equivalent to 6 times of duty that is saved on capital goods which are imported under the EPCG scheme, that are to be fulfilled in 6 years which I reckoned from the Authorization issue-date (para 5.1 an of FTP).
The scheme can thus be taken both post exports and pre exports. The export obligation which is discharged would thus require fulfilment of specific export obligation which is in addition to the existing Average export performance over a period of three years.
Period of import would thus e 9 months. Exporters who are availing benefit under the Technology Up gradation Fund Scheme (“TUFS”) can also avail the benefit of Zero duty EPCG Scheme. Import of motor cars, SUV’s, all the purpose vehicles by hotels, travel agents, or tour or transport operators and the companies owning/ operating golf resorts are not allowed. Export Obligation for the domestic sourcing of capital goods which is under the EPCG schemes has thus been reduced by 10% in order to encourage import substitution.
3.2 Post Export EPCG Duty Credit Scrip Scheme:-
A Post Export EPCG Duty Credit Scrip Scheme shall be thus available for the exporters who intend to import capital goods on full payment of the applicable duty in form of cash.
4. EOU/EHTP/STP & BTP SCHEMES:-
Units which are undertaking in order to export their entire production of goods and services may thus be set up under this scheme for the import/ procurement domestically without any payment of duties. For the details of scheme and the benefits are available therein then FTP may be required.
5. OTHER SCHEMES:-
5.1 Towns of Export Excellence (TEE):-
Selected towns that are producing goods of Rs. 750 crores or more are thus notified as TEE on its potential for growth in exports and to provide financial assistance under the MAI Scheme to the recognized Associations.
5.2 Rebate of duty on “export goods” and “material” used in the manufacture of such goods:-
Rebate of duty which is paid on excisable goods which are exported or the duty paid on the material which is used in the manufacture of such export goods may thus be claimed under Rule of 18 of Central Excise Rules, 2002.
5.3 Export of goods under Bond i.e. without payment of excise duty:-
Rule 19 of the Central Excise Rules 2002 provides clearance of the excisable goods for exports without the payment of central excise duty either from the approved factory, warehouse and other premises.
5.4 Market Access Initiative (MAI) Scheme:-
Under this Scheme, the financial assistance which is provided for the export promotion activities on focus country, focus product basis to the EPCs, Industry & Trade Associations, State Government Agencies and the Indian Commercial Missions abroad in order to do market surveys, publicity campaigns, participate in the International Trade Fairs, set showrooms/ warehouses etc.
5.5 Marketing Development Assistance (MDA) Scheme:-
Financial assistance is also provided by the MoC through EPCs and trade promotion organizations to the exporters who are having an annual export turnover to Rs. 30 crores, in order to participate in trade fairs, buyer-seller meets abroad or in India, export promotion seminars in the form of travel grants to travel to the focus areas (for example Latin American, African, CIS etc markets).
Thus in addition to the above schemes, facilities like 24X7 customs clearance, a single window in customs, self-assessment of customs duty, prior filing facility of shipping bills etc are also available to facilitate exports.