SCHEMES FOR EXPORT PROMOTION

Subject : Economy

Concept :

1. Remission of Duties or Taxes on Export Product :

• The new scheme will be implemented from 1st January 2020 and will replace the existing Merchandise Exports from India Scheme (MEIS) and create a fully automated route for Input Tax Credit (ITC) in the GST to help increase exports in India.
• It is expected to adequately incentivize exporters by reducing duties paid on exports and will initiate the refund of various taxes to exporters.
• ITC is provided to set off tax paid on the purchase of raw materials, consumables, goods or services that were used in the manufacturing of goods or services. This helps in avoiding double taxation and the cascading effect of taxes.
• By adopting to RoDTEP scheme, Indian exporters will be able to meet the international standards for exports as affordable testing and certification will be made available to exporters within the country instead of relying on international organizations.
• Also under it, tax assessment is set to become fully automatic for exporters. Businesses will get access to their refunds for GST via an automatic refund-route.
• This would increase the economy for the country and working capital for the enterprise.
• RoDTEP is a WTO-consistent scheme under which indirect taxes on inputs are consumed in the production process.
• In general, according to principle recognised in WTO, indirect taxes on exports are reimbursed.

2. Duty-Free Import Authorisation (DFIA):

• DFIA is issued to allow duty free import of inputs, fuel, oil, energy sources, a catalyst which are required for production of export product.
• The Directorate General of Foreign Trade, an agency under the Ministry of Commerce and Industry, by means of Public Notice, may exclude any product(s) from purview of DFIA.
• Under the scheme, authorization is issued to allow duty free import of inputs.

3. Duty Drawback of Schemes:

• Duty Drawback is the rebate of duty chargeable on imported material or excisable material used in the manufacturing of goods that are to be exported.
• The exporter may claim drawback or refund of excise and customs duties paid by his suppliers.
• Lower import duties will reduce the government spending under the duty drawback scheme.
• Further, over-invoicing of exports will be avoided since there will be less possibilities of duty drawback from the government.

4. Export Promotion Capital Goods Scheme:

• EPCG is a zero duty scheme which allows the import of capital goods such as machinery for preproduction, production and post production of export items.
• The duty free import by an exporter has to be paid back in the form of an export obligation equivalent to 6 times of duty saved on capital goods imported under EPCG scheme, to be fulfilled in 6 years reckoned from Authorization issue-date

5. Trade Infrastructure for Export Scheme (TIES):

• The scheme would provide assistance for setting up and up-gradation of infrastructure projects with overwhelming export linkages like the Border Haats, Land customs stations, quality testing and certification labs, cold chains, trade promotion centres, dry ports, export warehousing and packaging, SEZs and ports/airports cargo terminuses.
• The Central and State Agencies, including Export Promotion Councils, Commodities Boards, SEZ Authorities and Apex Trade Bodies recognised under the EXIM policy of Government of India; are eligible for financial support under this scheme.
• The proposals of the implementing agencies for funding will be considered by an inter ministerial Empowered Committee.
• An Empowered Committee has to periodically review the progress of the approved projects in the Scheme and will take necessary steps to ensure achievement of the objectives of the Scheme.
• The Central Government funding will be in the form of grant-in-aid, normally not more than the equity being put in by the implementing agency or 50% of the total equity in the project.
• In case of projects located in North Eastern States and Himalayan States including J&K, this grant can be up to 80% of the total equity.
• The grant in aid shall, normally, be subject to a ceiling of Rs 20 Cr for each infrastructure project.