Export Incentives in India 2024 | Schemes, Benefits and Types

Exporting goods and services plays a critical role in driving India’s economic growth, providing a major source of foreign exchange earnings. This revenue helps boost India’s economy, strengthen its domestic industries, and increase its global competitiveness. To support this growth, the Indian government offers various export incentives aimed at encouraging businesses to enter international markets and strengthen their export operations.

India has set ambitious goals, such as expanding its gross domestic product (GDP) to $5 trillion by 2025. To achieve this, exports need to reach an impressive $1 trillion. Government-provided export incentives are essential to help exporters overcome infrastructural costs and meet global demands. In this guide, we’ll explore the key export incentive schemes offered in India, their benefits, and how they can help boost Indian exports.

What Are Export Incentives?

Export incentives are financial and non-financial benefits offered to exporters by the government. They serve as a reward for bringing foreign currency into the country and as compensation for the additional costs and challenges that exporters may face. These incentives not only improve the competitiveness of Indian products in global markets but also promote the growth of export businesses across the country.

The Directorate General of Foreign Trade (DGFT) oversees these incentives as part of India’s Foreign Trade Policy (FTP) 2015-20, which has been extended to facilitate continued support for Indian exporters. Let’s look at how these incentives work and the types available to Indian businesses.

How Export Incentives Work in India?

The government reduces taxes and duties on goods meant for export, making Indian products more affordable and competitive in international markets. These incentives are adjusted based on the availability of particular goods or materials and are modified periodically to reflect supply and demand.

Here’s an overview of the main types of export incentives in India:

• Exports from India Scheme
• Duty Exemption/Remission Schemes
• Export Promotion Capital Goods Scheme (EPCG)
• Other Incentives and Benefits

1. Exports from India Scheme

This scheme focuses on promoting both goods and services exports. It is divided into two parts: the Merchandise Exports from India Scheme (MEIS) and the Service Exports from India Scheme (SEIS).

Merchandise Exports from India Scheme (MEIS)

Under MEIS, exporters of specific goods are rewarded based on the Free on Board (FOB) value of their exports. Rewards are available for exports through courier or international post on consignments valued up to Rs. 5 lakh.

Service Exports from India Scheme (SEIS)

SEIS targets service providers who export eligible services. These exporters receive duty credit scrips based on their net foreign exchange earnings. International payments received through credit cards and other instruments are included in calculating this incentive.

Both MEIS and SEIS offer duty credit scrips, which can be used to pay customs and excise duties or basic customs duties for imports of capital goods. Exporters are encouraged to utilize these scrips to reduce their tax liability and enhance profitability.

Additional Privileges for Status Holders

Exporters with notable performance can achieve status holder recognition, which comes with additional privileges. These businesses, rated from one to five stars, receive priority treatment, including double weightage on export performance for certain industries, such as MSMEs and those in agri-export zones.

2. Duty Exemption/Remission Schemes

The duty exemption/remission schemes allow exporters to import raw materials duty-free, reducing production costs and enabling more competitive pricing for Indian goods in global markets. The key schemes include:

Advance Authorisation Scheme

This scheme allows duty-free import of inputs that are part of the export product. Items like oil, fuel, and catalysts are included under this scheme, with value addition determined by standard input-output norms.

Advance License for Annual Requirement

This license is issued based on the annual needs of an exporter for physical exports, intermediate supplies, or deemed exports. Only exporters rated as one to five-star export houses are eligible for this license.

Duty-Free Import Authorisation (DFIA)

The DFIA scheme allows duty-free import of inputs, covering the basic customs duty portion. Additional excise duties can be adjusted as CENVAT credit, ensuring that exporters retain their profitability.

Duty Drawback Scheme

This scheme provides refunds on customs and excise duties paid on inputs and raw materials used in export production. Exporters can claim duty drawback if they re-export imported goods within a set time. If sale proceeds are not received within a stipulated time, the drawback is reversed.

Rebate of State and Central Taxes and Levies (RoSCTL)

Initially aimed at textile exporters, this scheme provides benefits in the form of duty credit scrips. While initially for textiles, it has the potential to expand to other sectors.

3. Export Promotion Capital Goods (EPCG) Scheme

The EPCG scheme is designed to facilitate imports of capital goods, helping businesses enhance their production quality and capabilities at zero customs duty. This scheme enables Indian industries to stay competitive in both domestic and international markets by accessing modern equipment and technology.

Through the EPCG scheme, businesses can import capital goods at different production stages, from pre-production to post-production. This scheme is particularly beneficial for industries that rely on high-quality machinery and technology to compete in the global market. Additionally, imports under the EPCG scheme are exempt from integrated goods and services tax (IGST) and compensation cess.

4. Other Export Benefits in India

The government also provides several other export benefits to boost India’s export ecosystem:

• Towns of Export Excellence: These towns are selected based on their export potential. Businesses within these towns receive additional benefits and support from the government to help enhance local industries and increase their export potential.
• Gold Card Scheme: This scheme provides credit facilities to top-rated exporters to help them finance their operations.
• Market Access Initiative (MAI) Scheme: This initiative supports market research and development activities, helping exporters explore new markets and expand their reach.
• Marketing Development Assistance (MDA) Scheme: This scheme offers assistance to exporters, especially small and medium enterprises (SMEs), for export promotion activities such as trade fairs and exhibitions.
• Status Holder Scheme: Exporters with substantial export performance are given status holder recognition, which offers various benefits, including priority in customs clearance and lower documentation requirements.

Conclusion

India’s export incentive schemes provide vital support for businesses aiming to grow their presence in international markets. By reducing costs, enhancing competitiveness, and providing support for market expansion, these incentives play a crucial role in achieving India’s ambitious export targets. As the government continues to adjust and improve these schemes, exporters have the chance to thrive on the global stage and contribute to India’s economic growth.

Whether you’re an established exporter or considering entering international markets, understanding these incentives can be a game-changer for your business. With the right knowledge and a strategic approach, Indian exporters can make the most of these benefits, ensuring profitability and success in the competitive world of international trade.

Also Read: What is DGFT and Its Role in Import Export?