The Foreign Trade Policy 2015-20 and other Government of India schemes promoting international trade have been building an ecosystem that best supports sustainable export activities. In view of the unprecedented current situation due to the COVID-19 pandemic, the Government has extended the FTP 2015-20 (except SEIS) by another one year i.e. up to March 31, 2021. Here are the schemes for exports from India:
The Government of India has introduced Merchandise Exports from India Scheme (MEIS) through the Foreign Trade Policy (FTP) 2015-20 w.e.f. April 1, 2015, with extended validity up to March 31, 2021. It seeks to promote the export of notified goods manufactured/ produced in India. MEIS is a major export promotion scheme of GOI implemented by the Ministry of Commerce and Industry. The popularity of the scheme can be gauged from the fact that in 2019-20, the liability under the MEIS rose to about Rs.450 billion. The Department of Commerce is reviewing the coverage of MEIS tariff lines and rates so that the MEIS incentive for this fiscal is capped at Rs 90 billion, and the saving shall be used for supporting the sectors that have potential to grow and contribute towards the Atmanirbhar Bharat and has a higher potential for exports. Salient features of MEIS are as under:
The sectors or segments mentioned below are not entitled to MEIS incentives:
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The reward/incentives provided by the Government make the exporters competitive in the international market including Europe, The United States of America and Africa. These three markets are covered under the scheme for all notified 5,012 tariff lines.
The Government introduced the Service Exports from India Scheme (SEIS) w.e.f. 01.04.2015 under the Foreign Trade Policy (FTP), 2015-20 replacing the earlier scheme ‘Served from India Scheme’ under the FTP, 2009-15. Under SEIS, the service providers of notified services were incentivized in the form of Duty Credit Scrips at the prescribed rates, on their net foreign exchange earnings. These SEIS scrips were transferrable and could also be used for payment of a number of Central duties/taxes including the basic customs duty.
The SEIS was valid up to 31 March 2020. While the FTP has been extended up to 31 March 2021, a decision on continuation of SEIS will be taken and notified subsequently.
These schemes enable the duty-free import of inputs for export production with an export obligation. This scheme consists of:
Under this scheme, duty-free import of inputs is allowed, which are physically incorporated in the export product (after making normal allowance for wastage) with a minimum 15 per cent value addition. Advance Authorization (AA) is issued for inputs in relation to resultant products, as per SION or on the basis of self-declaration, as per procedures of FTP. AA normally has a validity period of 12 months for the purpose of making imports, and a period of 18 months for the fulfillment of Export Obligation (EO) from the date of issue. AA is issued either to a manufacturer exporter or merchant exporter tied to a supporting manufacturer(s).
Exporters having past export performance (in at least preceding two financial years) shall be entitled to Advance Authorization for Annual requirement. This shall only be issued for items having SION.
DFIA is issued to allow duty-free import of inputs, with a minimum value addition requirement of 20 per cent. DFIA shall be exempted only from the payment of basic customs duty. DFIA shall be issued on a post export basis for products for which SION has been notified. Separate schemes exist for gems and jewellery sector for which FTP may be referred.
The scheme is administered by the Department of Revenue. Under this scheme, products made out of duty paid inputs are first exported and thereafter refund of duty is claimed in two ways:
i) All Industry Rates: As per Schedule
ii) Brand Rate: As per application on the basis of data/documents.
Zero duty EPCG scheme allows import of capital goods for pre-production, production and post-production (including CKD/SKD thereof as well as computer software systems) at zero Customs duty, subject to an export obligation equivalent to six times of duty saved on capital goods imported under EPCG scheme, to be fulfilled in six years reckoned from Authorization issue-date.
Units undertaking to export their entire production of goods and services (except permissible sales in DTA), maybe set up under the Export Oriented Unit (EOU) Scheme, Electronics Hardware Technology Park (EHTP) Scheme, Software Technology Park (STP) Scheme or Bio-Technology Park (BTP) Scheme for the manufacture of goods, including repair, re-making, reconditioning, reengineering and rendering of services. Trading units are not covered under these schemes.
Selected towns, producing goods worth Rs 7.5 billion or more, are notified as TEE based on the potential for growth in exports. Registered export units in the region are eligible for the facility of EPCG schemes, as well as financial assistance under MAI Scheme through recognized Associations.
Rebate of duty paid on excisable goods exported, or duty paid on the material used in the manufacture of such export goods, may be claimed under Rule of 18 of Central Excise Rules, 2002.
Rule 19 of Central Excise Rules 2002 provides clearance of excisable goods for exports without payment of central excise duty from the approved factory, warehouse, and other premises.
Under the Scheme, financial assistance is provided for export promotion activities on focus country, focus product basis to EPCs, Industry & Trade Associations, etc. The activities are like market studies/surveys, setting up showroom/warehouse, participation in international trade fairs, publicity campaigns, brand promotion, reimbursement of registration charges for pharmaceuticals, testing charges for engineering products abroad, etc.
Financial assistance is available for exporters having an annual export turnover up to Rs 300 million for trade fairs, buyer-seller meets organized by EPC’s/ Trade promotion organizations. MDA guidelines are available here.