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ROLL NO. 05 06 07 44 54 60





We are very much glad to Prof. MINAL GANDHI for giving us such a knowledgeable project. It was an immense pleasure to work on this project. In this project we got to know about the EXPORT ASSISTANCE & INCENTIVES. We are also hoping for such good and knowledgeable projects in future also. Thanking you…



MEANING OF EXPORT ASSISTANCE AND INCENTIVES Export assistance and incentives is a financial help given by the Government to Indian exporters to improve their ability to compete in foreign markets. INTRODUCTION The Export-Import policy 1992-97 brought about many fundamental changes in India‟s external trade policy. Indian exporters can survive provided they can produce good quality at reasonable cost.SYBMS@VES EXPORT ASSISTANCE & INCENTIVES 7TH FEBRUARY. 2009. But many of these incentives were‟ withdrawn by the 1992-97 and subsequent policies. We can export our goods but cannot taxes. It gradually laid the foundation of globalization of Indian economy by initiating liberalization and making Indian industries to face competition from foreign MNCs. Indian markets were highly protected and the Indian government used to give many incentives to the Indian exporters. In the domestic market particularly is highly taxed. 4 . Until 1992. The exporters need various concessions and rebates to make the price competitive.

India could not look at international markets especially because of her extremely limited capacity to offer supplies of. Fortunately. Over the last couple of decades export promotion has assumed critical importance in Indian economy. with the increasing burden of debtservicing on the one hand and the situation of aid fatigue on the other. considered it as appropriate to lay emphasis on the need for export promotion so as to enable the country to meet the‟ need of imports. Consequently India‟s capacity to export manufactures or industrial products was extremely limited. IMPORTANCE OF EXPORT ASSISTANCE Export promotion was accorded a very low priority during the initial pregame of economic development in India. 2009. However after 1965-66. Moreover. Hence. Similarly during the period of the First Three Five year plans over 1950-51 to 1965--66" Indian economy was in a formative stage.industrial products. Government of India had therefore. marine and other sectors have reached a stage from where they were looking for an opening in international market. leather. In addition. 5 . because of the large size of the domestic market in India. the urgency of earning foreign exchange through expanding exports was not there. The process of globalization and liberalization has further enhanced the need of strengthening the support of export-import trade business of the country. Moreover. Export growth has become the main determinant of economic growth in India.SYBMS@VES EXPORT ASSISTANCE & INCENTIVES 7TH FEBRUARY. the aid flows to India were substantially reduced. it received an encouraging response from the industrial sector which was also looking for international markets. a number of industries especially in the engineering. for the first time India was made to depend significantly on her exports for acquiring foreign exchange to meet her needs of essential imports. Consequently. Hence. „import substitution‟ rather than the‟ export promotion‟ was considered as a more useful strategy for India‟s economic Development process. chemicals. During the 1950s and almost up to mid 1960 export-promotion was not at all considered as an essential element in India‟s economic development process. on this account as well. Easy and adequate availability of external assistance from World Bank and other international agencies as well as developed countries has provided India with more than Adequate amount of foreign exchange for financing development as well as essential imports. by the second-half of 1960s.

export. the feasibility of financing almost entirely depends upon the growth in Indian export. promotion is being an overriding consideration in policy formulation. Hence. c) Measures for strengthening marketing effort by the export sector. exports have now emerged as the only viable source of meeting the foreign exchange needs of Indian economy. It may. Export promotion‟ policy in India has three main segments. be. They are as follows: a) Policies for increasing Investment and production in export sector. therefore. Hence.SYBMS@VES EXPORT ASSISTANCE & INCENTIVES 7TH FEBRUARY. 2009. 6 . stated that the future economic growth in India is inseparably linked with growth in Indian exports. b) Price-support measures for rendering exports more competitive.

9. 6. It helps to achieve socio-economic objectives of the country. 2009. 5. Export assistance & incentives make the business financially attractive. It makes available expertise in the field of export marketing. It compensates for higher domestic cost of production. It helps to increase the profit in the business. It removes the deficit in the balance of payment. Some of the common advantages are: 1. 11. ADVANTAGES/ ROLE OF EXPORT ASSISTANCE & INCENTIVES IN EXPORT PROMOTION Over the years assistance & incentives provided by our Government has helped Indian exporters in many ways. It makes optimum utilization of the available resources between domestic & overseas markets. It helps to reduce trade deficit. It helps to earn the goodwill for the country.servicing.SYBMS@VES EXPORT ASSISTANCE & INCENTIVES 7TH FEBRUARY. It provided much needed help to the new exporters. 2. It has resulted in earning high foreign exchange & opening up new areas of business. 7 . It enables exporters to expand & diversify the business. 14. 13. It facilitates repayment of loans including debt. 3. 7. 8. 4. It improves the competitive ability of the exporters. 12. It creates new employment opportunities. 10.

Participation in the international trade fairs & exhibition. Purposes for which Blanket Permits are used: 1. Any other expenses approved by RBI. 14. Export promotion tours abroad. 2. 5. Publication in foreign journals. 9. 7. Replacement of defective or wrong supplies. Blanket permits are issued by RBI for a lump sum amount subject to its having fulfilled certain export obligations. 6. 3. 13. 11. 10. Opening branch overseas. Expenses related to execution of contracts. 2009. 12.SYBMS@VES EXPORT ASSISTANCE & INCENTIVES 7TH FEBRUARY. Market studies abroad. Filing tenders abroad and payment of earnest money. Purchase of samples abroad. star trading houses. 8. Expenses of quality testing abroad. trading houses. 4. BLANKET PERMITS Blanket permits is a facility given to large scale exporters only such as export houses. 8 . & super star trading houses. Payment for patents & trade marks to be registered abroad. Payment of consultancy & legal fees abroad. Setting up after sale service network abroad. Advertising campaign abroad. 15.

The credit shall be available against such export products & at such rate as may be specified by the DGFT. POST-EXPORT BASIS: DEPB on post-export basis shall be granted against exports already made. Validity: DEPB shall be valid for 12 months from the date of its issue. Eligibility: Merchant-exporter eligible for DEPB. an exporter is eligible to claim as a specified percentage of FOB value of exports. (a) Pre-export basis & (b) Post-export basis (a) PRE-EXPORT BASIS: DEPB on pre-export basis aims to provide the facility to eligible exports o import inputs which required for production.. Types: DEPB is of two types viz. 2009. & manufacturer-exporter are (b) 9 .SYBMS@VES EXPORT ASSISTANCE & INCENTIVES 7TH FEBRUARY. DUTY ENTITLEMENT PASSBOOK (DEPB) DEPB was introduced in the EXIM Policy 1997-2002. Under the Duty Entitlement Passbook (DEPB) Scheme.

2009. 10 . 2. SPECIAL IMPORT LICENCES One of the special incentives given to Indian exporters includes Special Import Licences (SIL). 4. SIL is available for the following categories of exporters: 1. SSI Exporters. Manufacturers with ISO 9000 or BIS 14000. Export to ACU countries. Under EXIM Policy 1997-2002.150 items have been shifted from restricted list to SIL list. Deemed Exports. EH/TH/STH/SSTH. SIL is freely transferable. 3. SSI holders can import certain items which cannot be imported by other exporters.SYBMS@VES EXPORT ASSISTANCE & INCENTIVES 7TH FEBRUARY. 5.

Relief from tax on dividends of shares and the royalties from certain foreign enterprises. 8. Five-year tax holiday to units in free trade zones or export processing zones. Tax relief to playwrights. Deductions of specified amount of profits of companies engaged in the business of hotel or of a tour operator or a travel agent. 6. TAX INCENTIVES & RELIEFS Income-Tax Relief to Exporters: 1. artists. 2009. 11 . Tax relief to an Indian company or resident tax payer by giving a deduction of 50% of the profit from the project exports in computing the taxable income. 3. Tax relief on remuneration received from abroad by teachers. Tax relief on export of computer software. Five-year tax holiday of 100% export oriented units. 5.SYBMS@VES EXPORT ASSISTANCE & INCENTIVES 7TH FEBRUARY. Tax exemption on plantation subsidy. 10. 2. 9. 4. sportsmen. Deductions of whole of the profits derived from export of specified goods or merchandise of exporters or Export Houses or Trading Houses. 7.

Regular exporters can apply once in a year (preferably in June) to fix up brand rates. New Delhi. CLAIMING EXPORT INCENTIVES (1)Duty Drawback: Under duty drawback scheme the exporter is eligible to get refund of custom duty & excise duty paid on materials. These rates are published once in a year. The drawback rates are determined in either specified terms or in terms of percentage of net F. (b) ALL INDUSTRY RATES: All-Industry Rates is applicable to all exports alike as notified by the Government of India. Rates of Drawback: There are two different rates of drawback viz. value of the goods.B. The data submitted by exporter is verified by the Custom Officer/Central Excise Officers and the report is forwarded to: The Director (DBK) Ministry of Finance. 2009. The Director will sanction the Brand Rate.SYBMS@VES EXPORT ASSISTANCE & INCENTIVES 7TH FEBRUARY. 12 . (a) Brand Rates & (b) All Industry Rates (a) BRAND RATES: These are fixed manufactures-wise on the basis of data furnished by the manufacturers. Application for Brand Rates: An exporter willing to take advantage of brand rates must apply within one month from the date of export.O. components & consumable utilized in the manufacture of finished goods.

13 . Since February 1986. A copy of shipping bill (Drawback Copy). Any other document. A copy of brand latter. V. 4) Refund of Drawback: The filling of the Green Shipping Bill itself is an application for the agent of drawback duty.SYBMS@VES EXPORT ASSISTANCE & INCENTIVES 7TH FEBRUARY. if applicable. 1. II. DBK claim is passed within 24 hours of presentation of papers. 3) I. IV. If the documents are in order. cheques are issued to the exporter. A copy of bill of lading (non-negotiable). Necessary Documents: A copy of commercial invoice duly certified by the bank. There are two different methods of providing exemption viz. Excise Rebate & 2. 2009. The data is verified by the Custom Officers. III. 2) Time to Apply: After the Customs Officer has given „let ship order‟ the expor ter should apply within 60 days. Within the next 15 days the amount is transferred to the exporter‟s bank account. Export under Bond. (2)EXCISE DUTY: Goods manufactured in India & meant for exports to other countries are exempted from the Central Excise Duty. PROCEDURE TO CLAIM DBK 1) Application: The exporter has to submit his application to the nearest Customs House. the Government of India has introduced a new simplified procedure of disbursement..

(3)Sales Tax Exemption: State Governments have exempted exportable goods for payment of sales tax. 1. However. the exporter may be called at STO for clarifications. 14 . Finished goods when exported out of India are eligible for excise duty exemption under bond. Export under bond: Duty is not paid but an indemnity bond is executed in favour of excise authorities. On verification of the report. STO deputes an inspector to visit the office of the exporter. Partnership Deed. 2. If need be.SYBMS@VES EXPORT ASSISTANCE & INCENTIVES 7TH FEBRUARY. 2009. On receipt application. etc. (b) Memorandum and Articles of Association. 3. Excise Rebate: Under this method. the exporter pays the amount of Excise Duty to the Authorities. 2. Registration Procedure: 1. Certificate of Incorporation. After Shipment of goods. Inspection of Documents: The inspector inspects relevant books & documents such as (a) Sales and purchase Registers. Application to STO: An application in prescribed form should be submitted to the sales tax (STO) in whose jurisdiction the exporter‟s office is situated. (c) Any other relevant document. Export to Nepal & sales to duty free shops are also exempted from excise duty exemption under bond. Report of Inspector: The inspector submits his report to STO. the exporter claims refund of the same. exemption is not granted unless the exporter or his firm is registered with sales tax authorities. the STO may grant sales tax registration number to the exporter.

iii. if goods are purchased for export purpose. he has to submit certified copies of the following documents along with his application. The seller/manufacture sends one copy of the Form „H‟ to the STO along with his Return of Sales Tax. Granting of Sales Tax No. The exporter has to affix necessary fee stamp on each of the Form „H‟ issued. Here after. Confirmed export order. 5. Obtaining Form ‘H’: A registered exporter has to apply to the concerned STO of his area to obtain Form „H‟. which is prepared in triplicate.SYBMS@VES EXPORT ASSISTANCE & INCENTIVES 7TH FEBRUARY. STO may issue refund of sales tax amount. 2. Shipping bill duly certified by the Customs. ii. Submission of Security Bond: The exporter has to submit security bond from another firm already having a sales tax registration number.: When the formalities mentioned above are completed. The other copy is retained by him. Purchase invoice. if already paid. 2009. STO affixes the exporters company stamp on the Form „H‟. the exporter has to fill in the relevant details in Form „H‟. Exemption Procedure: 1. iv. Only then he gets a registration number for his own firm. For this. i. STO grants Sales Tax Registration Number to the exporter. 4. The exporter retains one copy for him & the other two copies are given to the seller/manufacturer from whom he purchased the goods for export purpose. Letter of Credit. 15 . Processing of Form ‘H’: After shipment of the goods.

(4)Octroi Refund: When the exporter brings manufacture goods inside the municipal limits of the city. he is required to pay Octroi duty to the Municipal Corporation. 16 . He can claim refund of Octroi duty. 2009. when he shows the proof of export to the relevant Municipal Authorities.SYBMS@VES EXPORT ASSISTANCE & INCENTIVES 7TH FEBRUARY.

8 years 6 times CIF value of CG 5 times CIF value of CG 6 years 6 times CIF value of CG 5 times CIF value of CG 6 years 17 .. 1 crore or more for electronic. agriculture. Imports of capital goods are allowed and the rate of import duty has been reduced from 15% to 10%. 2009. floriculture. With view to achieve this target. pisciculture. 10 lakhs or more for software sector. Those exporters wish to take the advantage of this scheme must export four times the CIF value of imports. animal husbandry. gems & jewellery. EXPORT OBLILGATION CUSTOMS DUTY FOB BASIS 4 times CIF value of CG 6 times CIF value of CG NFE BASIS Not applicable 5 times CIF value of CG PERIOD 10% 5 years Zero duty (in case of CIF value is Rs. viticulture. the exporter is given time of five years. Zero duty in case CIF value is Rs. poultry & sericulture. 20 crores or more) Zero duty in case CIF value is Rs.SYBMS@VES EXPORT ASSISTANCE & INCENTIVES 7TH FEBRUARY. food processing. EXPORT PROMOTION OF CAPITAL GOODS This scheme functions with commitment on the part of exporters. horticulture.

the following are eligible: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) Consultants Travel agents and tour operators Architects Artists Chartered accountants Diagnostic centers Engineers Doctors Scientists etc. The import of second hand capital goods under the scheme is subject to certain conditions. Such domestic manufacturers are permitted to import components at concessional customs duty of 10%. In manufacturing sector. Capital goods means: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) Plant Machinery Equipment Packing machinery and equipment Quality and pollution control Testing instruments Power generation sets Machine tools Refrigeration equipment Research and development etc. manufacturer exporters are eligible to import capital goods. 18 . Import of Capital Goods Under this scheme. 2009. it is subject to actual user conditions. In the service sector. Eligibility: EPCG scheme is available both for manufacturing and service sectors. exporters are allowed to import both new and second hand capital goods with residual life of ten years. Features of EPCG scheme: (1) (2) The EPCG licence holder can buy capital goods from domestic manufacturers. Whatever capital goods are imported.SYBMS@VES EXPORT ASSISTANCE & INCENTIVES 7TH FEBRUARY.

2009. the EPCG licence holder must submit a consolidated statement of exports. the government reserves the right to initiate action against the exporters. When export obligation is fulfilled. 19 . EPCG is a facility given to the exporters to improve their business. (3) (4) (5) (6) (7) (8) In order to know about the progress of business. the EPCG licence holder has to submit a report of his export every six months. the exporter has to apply to Director General of Foreign Trade (DGFT) with application fee and relevant documents. If they fail to fulfill the export obligation within the stipulated period. the licence holder must fulfill the export obligations.SYBMS@VES EXPORT ASSISTANCE & INCENTIVES 7TH FEBRUARY. The EPCG licence holder will submit a certificate from his banker when payment is received from abroad. In order to continue to get the benefit of EPCG scheme. This report must be certified by a Chartered Accountant who is not a business associate of the exporter. In order to get registered for EPCG facility.

Supply of goods to any project approved by the Ministry of Finance at zero customs duty. Supply of goods to the power. In all cases of deemed exports. Electronic Hardware Technology Parks (EHTPs). Supply of capital goods and spares to the extent of 10% of FOB value to fertilizer plants. DEEMED EXPORTS Deemed exports refer to those transactions in which the goods supplied to not leave the country.SYBMS@VES EXPORT ASSISTANCE & INCENTIVES 7TH FEBRUARY. the following categories of supply of goods are included provided they have been manufactured in India: (1) (2) Supply of goods against duty free licences issued under the Duty Exemption Scheme. oil and gas sectors approved by Ministry of Finance. supplies are required to be made directly to the designated projects/agencies/EPCG licence holders. The payment for such goods are made in India by the recipient of the goods. Supply of capital goods to holders of licences under the Export Promotion Capital Goods (EPCG) Scheme. Software Technology Parks (STPs). Supply of goods to projects financed by multilateral of bilateral agencies as notified by the Department of Economic Affairs. Categories of Supply: Under the Exim Policy 1997-2002. 2009. Ministry of Finance under international competitive bidding. Export Processing Zones (EPZs). Supply of goods to: (a) (b) (c) (d) (3) (4) (5) (6) (7) Export Oriented Units (EOUs). 20 .

21 . Refund of Excise Duty.SYBMS@VES EXPORT ASSISTANCE & INCENTIVES 7TH FEBRUARY. Special Import Licence @ 6% of the FOB value (excluding all taxes and levies). Special Import Licence/Advance Intermediate Licence. Benefits of Deemed Exports Deemed exports shall be eligible for the following benefits as regards manufacture and supply of goods: (1) (2) (3) (4) Deemed Exports Drawback Scheme. 2009.