Export Incentives in India: Types & Benefits

India’s economy is one of the fastest-growing economies in the world. As a part of economic reforms, the government has formulated many economic policies that have led to the country’s gradual economic development. Under the changes, there has been an initiative to improve the condition of exports to other countries.

In this regard, the government has taken up a few actions to benefit businesses in the export trade. The primary 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. Some of the major types of export incentives are:

• Advance authorization scheme
• Advance authorization for annual requirement
• Export duty drawback for customs, central excise, and service tax
• Service tax rebate
• Duty-free import authorization
• Zero-duty EPCG scheme
• Post export EPCG duty credit scrip scheme
• Towns of export excellence
• Market access initiative
• Market development assistance scheme
• Merchandise exports from India scheme

Since the initiation of the liberalization plan in the 1990s, economic reforms have emphasized open-market economic policies. Foreign investments have come in various sectors, and there has been good growth in the standard of living, per capita income, and Gross Domestic Product. Moreover, there has been a greater emphasis on flexible business and doing away with excessive red-tapism and government regulations.

Some of the different types of export incentives 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 the production of an export item. Moreover, the licensing authority has fixed the value of the additional export products to not below 15%. The scheme has a validity period of 12 months for imports and 18 months for carrying out the Export Obligation (EO) from the date of issue typically.

Advance Authorization For Annual Requirement

Exporters who have a previous export performance for at least two financial years can avail of 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 refund is carried out in the form of a 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 the duty drawback scheme.

Service Tax Rebate

In the case of specified output services for export goods, the government provides rebates on service tax to exporters.

Duty-Free Import Authorization

This is also one of the export incentives the government has introduced by combining the DEEC (Advance License) and DFRC to help exporters get free imports on certain products.

Zero Duty EPCG (Export Promotion Capital Goods) Scheme

In this scheme, which applies to exporters of electronic products, import of capital goods for production, pre-production, and post-production is allowed at zero percent customs duty if the export value is at least six times the duty saved on capital goods imported. The exporter needs to verify this value(Export Obligation) within six years of the issuing date.

Post Export EPCG Duty Credit Scrip Scheme

Under this export scheme, exporters who aren’t sure about paying the export obligation can obtain an EPCG license and pay the duties to the customs officials. Once they fulfill the export obligation, they can claim a refund of the taxes paid.

Towns Of Export Excellence (TEE)

Towns that produce and export goods above a particular value in the identified sectors would be known as towns of export status. Towns will be given this status based on their performance and potential in exports to help them reach new markets.

Market Access Initiative (MAI) Scheme

An effort to provide financial guidance to eligible agencies for undertaking direct and indirect marketing activities like market research, capacity building, branding, and compliances in importing markets.

Marketing Development Assistance (MDA) Scheme

This scheme aims to promote export activities abroad, assist export promotion councils to develop their products, and other initiatives to carry out marketing activities abroad.

Merchandise Exports From India Scheme (MEIS)

This scheme applies to the export of certain goods to specific markets. Rewards for exports under MEIS will be payable as a percentage of realized FOB value.

Thanks to all these export incentives, exports have increased by a right margin, and there is a favorable atmosphere in the business community. The government is also upcoming with many other benefits to strengthening the export sector of the country further.