Export Promotion Scheme

An export promotion scheme is a set of policies and measures implemented by a

government to support and encourage exports of goods and services from a
country. The aim of such a scheme is to boost the competitiveness of the
country's exports, expand its export markets, and promote economic growth.

Export promotion schemes can take many forms, such as tax incentives,
financial assistance, export credit, insurance, subsidies, and other forms of
support. These schemes are typically designed to reduce the costs of exports,
increase the availability of financing, and help businesses overcome other
barriers to exporting, such as regulatory hurdles and logistical challenges.

Export promotion schemes vary widely from country to country and can be
tailored to specific industries, regions, or types of businesses. Some examples of
popular export promotion schemes include the United States Export-Import Bank,
the European Union's Market Access Strategy, and Japan's Export Credit
Insurance Corporation.

Here are five export promotion schemes launched by the Indian

Government:

● Merchandise Exports from India Scheme (MEIS)

The Merchandise Exports from India Scheme (MEIS) was launched to promote
export of specified goods from India. The scheme provides exporters with duty
credit scrips which can be used to pay various duties like customs duty, excise
duty, and service tax. The scheme aims to enhance India's export
competitiveness by incentivizing exports of specific goods, such as textiles,
engineering products, and chemicals, to specific markets.
Relevance: MEIS is relevant for promoting exports of specified goods
manufactured in India and boosting the country's manufacturing sector.

Benefits to Exporters: MEIS provides exporters with duty credit scrips that can be
used to pay customs duties on imported goods or sold to other importers for their
use. This incentivizes exporters to export more goods and helps reduce their
overall cost of production.

Benefits to importers: MEIS benefits importers indirectly by incentivizing

exporters to export more goods, which can result in increased supply of goods in
the domestic market and can help stabilize prices.

Targeted Merchandise Category: Specified goods manufactured in India.

Below are the details of goods that the MEIS scheme supports under the Foreign
Trade Policy (2015-2020)

Merchandise Goods: Spices, essential oils, fruits, vegetables, tea, coffee,

processed foods.
Eco-friendly Products: Jute products, coir, handlooms, handicrafts.
Marine Products
Textile (including readymade garments) for countries like Japan, Canada, the EU
and the USA.
Other products include pharmaceuticals, industrial machinery, chemicals, rubber,
leather (garments included), wooden and steel furniture, ships, planes and two-
wheelers (including bicycles).
There are a host of other capital and consumer goods, and the details of each
category the Government of India notifies of each category consistently.

There are certain clauses under the Merchandise Exports from India Scheme
(MEIS) that exporters need to fulfill in order to be eligible for incentives under the
scheme. Some of the key clauses include:

The exported goods should be manufactured in India.

The goods should be exported through specified ports of exports.
The exporter should have a valid Importer Exporter Code (IEC) issued by the
Directorate General of Foreign Trade (DGFT).
The exporter should have a valid Goods and Services Tax (GST) registration.
The exported goods should be covered under the list of products eligible for
MEIS benefits, as notified by the government.
The value of exports should exceed the minimum value threshold, which varies
depending on the product and export destination.
The exporter should file all relevant export declarations and shipping bills

● Services Exports from India Scheme (SEIS)

The Services Exports from India Scheme (SEIS) was launched to promote export
of notified services from India. The scheme provides service exporters with duty
credit scrips which can be used to pay various duties like customs duty, excise
duty, and service tax. The scheme aims to enhance India's export
competitiveness in the services sector, which includes software and IT services,
legal services, and healthcare services, among others.

Relevance: SEIS is relevant for promoting exports of specified services from

India and boosting the country's services sector.

Benefits to Exporters: SEIS provides eligible service exporters with duty credit
scrips that can be used to pay customs duties on imported goods or sold to other
importers for their use. This incentivizes service exporters to export more
services and helps reduce their overall cost of production.

Benefits to importers: SEIS benefits importers indirectly by incentivizing service

exporters to export more services, which can result in increased availability of
quality services in the domestic market and can help improve the overall quality
of services.

Targeted Merchandise Category: Specified services from India.

Targeted Market: All export markets.The SEIS scheme covers a wide range of
service sectors, including professional services, technical services, research and
development services, educational services, health services, and hospitality
services. The scheme is targeted at encouraging service providers to explore
new markets and to increase their export earnings from services.

In summary, the Services Exports from India Scheme (SEIS) targets service
providers in various sectors and aims to promote the export of services from
India. The scheme provides incentives to eligible service providers in the form of
duty credit scrips.

There are certain clauses in the Services Exports from India Scheme (SEIS) that
service providers need to fulfill in order to be eligible for incentives under the
scheme. Some of the key clauses include:

The service provider should have a minimum net foreign exchange earning of
US$15,000 in the preceding financial year.
The service provider should have an active Indian bank account and should have
filed all relevant tax returns.
The services should be rendered in any of the 12 sectors notified by the
government, including professional services, technical services, research and
development services, educational services, health services, and hospitality
services, among others.
The service provider should have a valid Service Export Promotion Council
(SEPC) registration.
The service provider should not be in the negative list of exporters or service
providers issued by the DGFT or any other government agency.
The service provider should not have any outstanding export obligations or any
disciplinary proceedings pending against them.
These are some of the key clauses under the SEIS scheme. It is important for
service providers to carefully review the eligibility criteria and comply with all the
requirements to avail of the benefits of the scheme.

● Export Promotion Capital Goods Scheme (EPCG)

The Export Promotion Capital Goods Scheme (EPCG) was launched to promote
the import of capital goods for producing goods and services for exports. Under
this scheme, exporters can import capital goods at zero customs duty for the
purpose of manufacturing goods for export. The scheme aims to enhance India's
export competitiveness by enabling exporters to import state-of-the-art machinery
and technology at affordable costs.

Relevance: EPCG is relevant for encouraging investments in the manufacturing

sector by making it easier for Indian businesses to import capital goods.

Benefits to Exporters: EPCG provides eligible exporters with the opportunity to

import capital goods for export production at reduced customs duty rates, which
can help reduce their overall cost of production and increase their
competitiveness in the global market.

Benefits to Importers: EPCG benefits importers indirectly by incentivizing

exporters to produce more export-oriented goods, which can result in increased
supply of goods in the domestic market and can help stabilize prices.

Targeted Merchandise Category: Capital goods.

The EPCG scheme is targeted at manufacturers and exporters of capital goods,

including machinery, equipment, and instruments. The scheme provides
incentives to these manufacturers and exporters to upgrade their technology and
equipment, and to enhance their competitiveness in the global market.

The EPCG scheme is available to all sectors, including engineering, chemicals,

pharmaceuticals, textiles, and electronics, among others. However, the scheme
is subject to certain export performance obligations, which require the exporter to
export a certain value of goods within a specified period of time.

There are certain clauses under the Export Promotion Capital Goods (EPCG)
scheme that exporters need to fulfill in order to be eligible for incentives under
the scheme. Some of the key clauses include:
The exporter should have a valid Importer Exporter Code (IEC) issued by the
Directorate General of Foreign Trade (DGFT).
The exporter should have a minimum export turnover of Rs. 1 crore in the
preceding financial year.
The capital goods to be imported should be used for production, manufacturing,
or processing of goods for export.
The capital goods should be imported within a specified period of time, which
varies depending on the sector and product.
The exporter should fulfill the export obligation, which requires the exporter to
export a certain value of goods within a specified period of time, usually 6 years
from the date of issuance of the EPCG authorization.
The exporter should maintain records of imports, exports, and other relevant
documents for at least 3 years from the date of fulfillment of export obligation.

● Special Economic Zones (SEZs)

Special Economic Zones (SEZs) were launched to promote exports and attract
foreign investment. SEZs are designated areas where businesses can operate
with special tax incentives, such as exemption from customs duty, excise duty,
and income tax. The aim of SEZs is to create an environment that is conducive to
export-oriented manufacturing and services.

Relevance: SEZ is relevant for promoting exports and attracting foreign

investment by creating an export-oriented environment in designated SEZs.

Benefits to Exporters: SEZ units are eligible for a host of fiscal and non-fiscal
incentives, including exemption from customs and excise duties, income tax, and
sales tax. This helps reduce their overall cost of production and increase their
competitiveness in the global market.

Benefits to Importers: SEZ benefits importers indirectly by incentivizing SEZ units

to produce more export-oriented goods, which can result in increased supply of
goods in the domestic market and can help stabilize prices.
Targeted Merchandise Category: All goods manufactured or produced within
SEZs.

Targeted Market: All export markets.The SEZ scheme is targeted at businesses

across various sectors, including manufacturing, services, and trading. The SEZs
are equipped with world-class infrastructure, including industrial parks, export-
processing zones, technology parks, and free trade zones, among others.

The SEZ scheme provides various incentives to businesses, including exemption

from customs duties, income tax, and central and state taxes, among others. The
scheme also allows businesses to repatriate 100% of their profits and provides
easy access to financing and other business support services.

There are certain clauses under the Special Economic Zones (SEZ) scheme that
businesses need to fulfill in order to operate in designated SEZ areas and avail of
the benefits of the scheme. Some of the key clauses include:

The business should be engaged in manufacturing, trading or services, and

should be export-oriented.
The business should have a positive net foreign exchange earning, which means
that the value of its exports should be higher than the value of its imports.
The business should be registered as an SEZ unit with the designated
Development Commissioner of the SEZ.
The business should operate within the designated SEZ area and comply with
the rules and regulations of the SEZ.
The business should fulfill the export obligation, which requires the business to
export a certain value of goods or services within a specified period of time,
usually 5 years from the date of commencement of operations.
The business should maintain records of its operations, including imports,
exports, and other relevant documents, and submit regular reports to the
designated authorities.

● Market Access Initiative (MAI)

The Market Access Initiative (MAI) was launched to enhance India's export
competitiveness by promoting exports of specific products to specific markets.

Relevance:The scheme provides financial assistance to exporters for activities

like market research, brand promotion, participation in trade fairs and exhibitions,
and buyer-seller meets. The aim of MAI is to identify potential markets for
specific products and facilitate market entry for Indian exporters.

Benefits to Exporters: MAI provides financial assistance to exporters to

participate in international trade events and promote their products in foreign
markets. This helps exporters to increase their visibility in global markets and
generate more export orders.
Benefits to importers: MAI benefits importers indirectly by facilitating the
participation of Indian exporters in international trade events, which can result in
increased availability of quality Indian products in foreign markets and can help
improve the overall quality of imports.

Targeted Merchandise Category: All goods.

The MAI scheme is targeted at promoting Indian exports to identified focus

countries and regions, which may include countries with high export potential or
countries with which India has signed free trade agreements or preferential trade
agreements. The scheme is open to all sectors, including agriculture, handicrafts,
textiles, and engineering, among others.

The MAI scheme provides financial assistance to eligible entities, including

export promotion councils, industry associations, and government agencies,
among others. The financial assistance covers a range of export promotion
activities, such as participation in international trade fairs and exhibitions,
organizing trade delegations and buyer-seller meets, and undertaking market
research studies and surveys, among others.
There are certain clauses under the Market Access Initiative (MAI) scheme that
eligible entities need to fulfill in order to avail of the benefits of the scheme. Some
of the key clauses include:

The entity should be registered under the relevant laws and regulations of India,
such as the Companies Act, the Societies Registration Act, or the Trusts Act,
among others.
The entity should be engaged in activities related to export promotion and should
have a track record of successful export promotion activities.
The entity should have a sound financial position and should not have defaulted
on any loans or payments to government agencies.
The proposed export promotion activity should be aimed at promoting exports
from India to identified focus countries and regions.
The entity should submit a detailed project proposal with specific objectives,
target countries, and expected outcomes, among other details.
The entity should submit regular progress reports and expenditure statements to
the designated authorities.

The rules related to duties paid on merchandise or services can vary depending
on the country and the specific goods or services involved. However, some
general rules and concepts are:

Import Duties: Import duties are taxes imposed by a country on goods that are
imported into its territory. The amount of duty paid on an imported item depends
on various factors such as the value of the item, its country of origin, and the
specific tariff rates applied by the importing country.
Value-added Tax (VAT): VAT is a consumption tax that is applied to the value
added at each stage of the production and distribution chain of a good or service.
VAT is typically paid by the final consumer but is collected at each stage of the
supply chain.
Excise Taxes: Excise taxes are specific taxes imposed on certain goods or
services such as tobacco, alcohol, and gasoline. These taxes are generally
designed to discourage consumption of the goods or services and to raise
revenue for the government.
Export Duties: Export duties are taxes imposed on goods that are exported from
a country. Some countries impose export duties to protect domestic industries or
to raise revenue.
Tariff Quotas: Tariff quotas are a specific type of trade restriction that allows a
certain quantity of a good to be imported at a lower tariff rate, with a higher tariff
rate applied to any quantity above the quota.
Free Trade Agreements: Free trade agreements (FTAs) between countries can
eliminate or reduce tariffs and other trade barriers, making it easier and less
expensive to import and export goods and services between the countries
involved.

Each of these schemes has been launched with a specific objective and target
audience in mind. The benefits of these schemes range from providing duty
credits to exporters to providing tax incentives to businesses operating in SEZs.
The specific merchandise categories and markets targeted by these schemes
also vary, depending on the scheme's objective. Some schemes may focus on
promoting exports of textiles to specific markets, while others may focus on
promoting exports of software services to specific markets. Rules related to
duties paid on merchandise or services may also vary, depending on the
scheme's objective and target audience.