Types of Export Incentives Schemes & Benefits in India
The economy of India is one of the fastest growing economies in the world. As a part of the economic reforms, a number of economic policies have been taken which have led to the gradual economic development of the country. Under the reforms, there has been an initiative to improve the condition of exports to other countries. With this regard, the government has taken quite a few initiatives to benefit businesses that are in the export trade. The main objective of these benefits is to simplify the whole export process and make it more flexible. On a broader scale, these reforms have been a blend of both social democratic and liberalization policies.
Since the initiation of the liberalization plan in the 1990s, the economic reforms have put emphasis on the open market economic policies. Foreign investments have come in various sectors and there has been a good growth in the standard of living, per capita income and Gross Domestic Product. As such, there has been a greater emphasis on flexible business and doing away with undue red tapism and government regulations.
Some of the different types of export incentives schemes and benefits that the government has initiated are:
- Advance Authorization Scheme: As part of this scheme, businesses are allowed to import input in the country without having to pay duty payment, if this input is for production of an export item. Moreover, the licensing authority has fixed the value of the additional export products to not below than 15%. The scheme normally has the validity period of 12 months for imports and 18 months for carrying out the Export Obligation (EO) from the date of issue.
- Advance Authorization for Annual Requirement: Exporters who have a previous export performance for at least two financial years can avail the Advance Authorization for Annual requirement scheme or more benefits.
- Export Duty Drawback for Customs, Central Excise, and Service Tax: Under these schemes, the duty or tax paid for inputs against the exported products is refunded to the exporters. This is done in the form of Duty Drawback. In case the duty drawback scheme is not mentioned in the export schedule, exporters can approach the tax authorities for getting a brand rate under duty drawback scheme.
- Service Tax Rebate: In case of specified output services for export goods, the government provides rebates on service tax to exporters.
- Duty-Free Import Authorization: This is another benefit the government has introduced by combining the DEEC (Advance License) and DFRC to help exporters get free imports on certain products.
In addition, there are also some more schemes related to the benefits for exporters:
- Zero duty EPCG scheme
- Post Export EPCG Duty Credit Scrip Scheme
- Towns of Export Excellence (TEE)
- Market Access Initiative (MAI) Scheme
- Marketing Development Assistance (MDA) Scheme
- Status Holder Scheme
Thanks to all these schemes, exports have increased and there is a favorable atmosphere among the business community. The government is also thinking of more such benefits to further strengthen the export sector of the country.