A detailed study of export promotion scheme in India

1. EXPORT PROMOTION SCHEME
IN INDIA

2. Government of India like almost all other has been endeavouring to develop
exports. Export development is important to the firm and to the economy as
whole.
The benefits of exports to the economy are
• When the domestic market is small, foreign market provides opportunities to
achieve economies of scale and growth.
• Supply of many commodities as in the case of a number of agricultural products
in India, is more than the foreign demand.
• Export enable certain countries to achieve export lead growth.
• Export markets may help mitigate the effects of domestic recession.
• A country may need to boost its exports to earn enough foreign exchange to
finance its imports and service its foreign debt.
• Even in the case of countries with trade surplus, export promotion may be
required to maintain its position against the international competition and level
of domestic economic activity.

3. Objectives of the export promotion measures in India are :
• Compensate the exporters for the high domestic cost of production.
• Provide necessary assistance to the new and infant exporters to
develop the export business.
• Increase the relative profitability of the export business.
ORGANISATIONAL SET UP
Government has established or sponsored a number of
organisations to provide different types of assistance to the exporters.
Apart from the organisations established exclusively for export
promotion there are also a number of other institution which assist
the export sector. Important organisations which help to promote
exports are

4. Ministry of commerce
The ministry of commerce, government of India, is the most important organ
concerned with the promotion and regulation of the foreign trade of the
country. The ministry has elaborate organisational arrangement to look after
various aspects of trade regulation and promotion. It plays as very important
role in different matters concerned with foreign trade of the country
including commercial relation with other countries, promotion and
regulation of foreign trade, state trading etc.
Autonomous bodies
• Export Inspection Council: The Export Inspection Council, a statutory body,
is responsible for the enforcement of quality control and compulsory
preshipment inspection of various exportable commodities.
• Indian Institute of Foreign Trade: It is registered under the Societies
Regulation Act, is engaged in activities like training of personnel in modern
techniques of international trade, area surveys, commodity surveys,
organisation of marketing research and market surveys.

5. • Indian Institute of Packaging : the main aim of institute are to undertake research on
raw materials for the packaging industry, to organise training programmes on packaging
technology, to stimulate consciousness of the need for good packaging etc.
• Export Promotion Councils, Commodity Boards and Authorities: These councils are
registered as non profit organisation under the Companies Act. The councils perform
both advisory and executive functions. These councils are also the registering authorities
under the Import Policy for registered exporters.
• Federation of Indian Export Organisations: It functions as a primary servicing agency to
provide integrated assistance to government recognised export houses and as a central
coordinating agency in respect of export promotion efforts in field of consultancy
services in the country,
• Indian Council of Arbitration: It promotes arbitration as a means of settling commercial
disputes and popularises arbitration among the traders, particularly those engaged in
international trade.
• India Trade Promotion Organisation: The ITPO was bought into being in 1992 by merging
together the erstwhile Trade Fair Authority of India(TFAI) and the erstwhile Trade
Development Authority of India (TDA).
Public Sector Undertakings
Some of the functions are

6. • The state Trading Corporations of India and its subsidiaries
• The spices Trading Corporation
• The export Credit Guarantee Corporation
ADVISORY BODY
Central Advisory Council on Trade: It consists of representatives from
different organisation and individuals with business standing and expertise in
the field of trade and commerce. The commerce is the chairman of this
council
INCENTIVES
Export incentives are a widely employed strategy of export promotion. The
main aim of these incentives is to increase the profitability of export
business. Important export incentives in India include rebate of duties, cash
compensatory support, interest rates, freight subsidy etc. The Abid Hussian
Committee has observed, they are more a compensation for the comparative
disadvantage faced by the Indian exporter than incentives.

7. Duty Exemption/Drawback
The scheme of duty exemption is designed to avoid the incidence of commodity
taxes like excise duty and customs duties on exports so as to make the exports
more price competitive. Duty exemption as an export promotion measure had its
origin in India during the Second Plan. Custom duties and excise duties on inputs
raise the cost of production in export industries and thereby affect the
competitiveness of exports. Therefore exports need to be compensated for the
escalation in their costs attributable to such customs and excise duties. There are 2
main drawbacks rates
• All industry rate applicable to a group of brands
• Brand rate applicable to individual products not covered by the industry rate.
Awards
A number of awards have been given instituted to encourage exports and to
recognise excellence in exports. There are separate awards for different categories
of exporters. Awards are given on the basis of development of market for products
which have not been exported previously, successful introduction of new products,
successful break through in foreign markets where conditions have been especially
difficult etc.

8. Other Incentives
• Some important incentives were terminated consequent to certain measures
taken as a part of the economic liberalisation.
• Cash Compensatory Support(CES) was a cash subsidy scheme designed to
compensate the exporters for unrebated direct taxes and to provide resources
for product/market development.
• Import Replenishment(REP) licenses, which were related to the f.o.b value of
exports.
• International Price Reimbursement Scheme was designed to make available
specified inputs to exporters at international prices.
Production Assistance/ Facilities
Export depend on exportable surplus and the quality and price of the goods.
Government have therefore taken a number of measures to enlarge and
strengthen the production base, to improve the productive efficiency and quality
of products and to make the products more cost effective.
Marketing Assistance
A number of steps have been taken to assist the exporters in their marketing
efforts. Some of the schemes and facilities which assist export marketing are

9. • Market Access Initiative: In 2001, Government had also announced the
launching of the Market Access Initiative scheme for undertaking
marketing promotion efforts abroad on country-product focus approach
basis.
• Trade Fairs and Exhibitions : It is an effective media of promoting
products, facilities are provided for enabling and encouraging
participating of Indian exporters/manufactures in such events. Example
the MPEDA organises seafood trade fair in India, in every 2nd year, which
attracts a number of foreign buyers and others connected with the
seafood industry.
• Finance : the Export-Import bank and commercial banks and other
financial institutions banks provide pre shipment and postshipment
finance to exports.
• Quality Control and Preshipment Inspection : number of steps have been
taken by the Government to improve the quality of exports and to ensure
that only goods of appropriate quality are exported from the country.
• India Brand Equity Fund: Government of India initiated steps to establish
it with the objective of promoting the made in India image abroad.

10. EPZ’S EOUs TPs & SEZs
Export Processing Zone(EPZ): They are industrial estates which form
enclaves from the national customs territory of a country and are
usually situated near seaports or airports. EPZ units can import capital
goods, raw materials etc for export production without payment of
duty. The objectives of EPZ are
• To earn foreign exchange.
• To generate employment opportunities.
• To contribute to the overall development of the economy.
Export Oriented Unit (EOU) : It refers to an industrial unit which
offers for exports its entire production, excluding permitted level of
rejects. EOUs were not normally encouraged in respect of products
subject to export control quota ceilings which can be reached by
existing units in the industry. EOUs enjoyed most other facilities and
incentives as were incentives as were available to the EPZ units.

11. SEZ’s
While announcing the Exim policy for 2000-01 the commerce minister
stated that India would develop Special Economic Zones to boost the
country’s exports. The only laws which will operate in these zones will
be the labour and banking laws. It was announced that all the existing
EPZs will be converted into SEZ’s. One of the most important reason for
the success of the Chinese SEZ’s is the absence of trade union. A
democratic country like India cannot think of denying the labour rights.
Yet, the big push of development envisaged by the SEZ’s should be
expected to have a very significant impact.