The government of India, with a special mention of the Ministry of Commerce, has launched many export promotion schemes to enable Indian exporters to sell their produce outside India. Since DGFT regulates the export-import of goods from India and to India, it has laid down various schemes and guidelines to assist Indian exporters in expanding their business.
With a special focus on MSMEs (Micro, Small and Medium
Enterprises), DGFT schemes aim to simplify the export procedure and incentivise
them to export to other nations as much as possible. We will know in detail
about various schemes launched by DGFT to unlock trade opportunities in India.
What are the Initiatives Taken by the Ministry?
To provide more focused attention to the development
of micro, small, and medium enterprises (MSMEs), the Ministry of MSME and its
affiliated organisations have initiated several schemes and programs aimed at:
- Ensuring a sufficient flow of credit from financial institutions and banks.
- Providing support for technology upgrading and modernization.
- Creating integrated infrastructural facilities.
- Establishing modern testing facilities and ensuring quality certification.
- Offering access to contemporary management practices.
- Promoting entrepreneurship development and skill enhancement through appropriate training facilities.
- Assisting in product development, design improvements, and packaging.
- Ensuring the welfare of artisans and workers.
- Providing support for improved access to both domestic and export markets.
- Implementing cluster-based initiatives for holistic growth.
DGFT Schemes Aimed at Export Promotion
DGFT, fully known as the Directorate General of
Foreign Trade, has implemented the schemes launched by the Department of
Commerce aimed at promoting the import and export of goods. The scheme launched
are:
Advance Authorisation Scheme
The Advance Authorisation Scheme (AA) permits the
duty-free import of inputs that are physically integrated into the exported
product. There is a provision for the usual allowances for items like fuel,
oil, and catalysts that are consumed or utilised in the production process of
the export product, which may also be allowed.
Imports made under the Advance Authorisation are
exempt from paying Basic Customs Duty, Additional Customs Duty, Education
Anti-dumping Duty, Countervailing Duty, Safeguard Duty, Transition Product
Specific Safeguard Duty, where applicable. Furthermore, Integrated Goods and
Service Tax and Compensation Cess are also exempted.
Manufacturers who are exporters or merchant exporters
affiliated with a supporting manufacturer can apply for the AA Scheme.
The Advance Authorisation Scheme allows the import of
inputs based on either notified Standard Input Output Norms (SION) or on a self-declaration
basis, subject to the procedures specified in the Handbook.
Except for the Gems and jewellery sector and certain
specified products, exporters are required to maintain a minimum of 15% Value
Addition under the Scheme. Value Addition is calculated in accordance with the
established guidelines.
Duty-Free Import Authorisation
(DFIA)
The Duty-Free Import Authorisation (DFIA) is similar
to the Advance Authorisation Scheme (AA) in that it permits the duty-free
import of inputs but only on a post-export basis. Imports made under the DFIA
scheme are only exempt from the payment of Basic Customs Duty.
Only inputs that are specified in the Standard Input
Output Norms (SION) are eligible for import under this scheme, and a minimum
value addition of 20% must be achieved.
Merchant Exporters can also benefit from this scheme
by providing the name and address of the supporting manufacturer on export
documents, such as the Shipping Bill, Bill of Export, or Tax Invoice.
Under the DFIA scheme, a Duty Credit Scrip is issued
on a post-export basis. This means that inputs used in the exported products
can be imported after the exports are completed. The Script is valid for 12
months from the date of issue and is freely transferable.
Export Promotion Capital Goods
(EPCG)
The primary objective of the Export Promotion Capital Goods (EPCG) Scheme is to facilitate the import of capital goods and
machinery for manufacturing goods, thereby enhancing India's manufacturing
competitiveness.
Under this export promotion scheme, both manufacturers
cum exporters and merchant exporters who are associated with supporting
manufacturers have the opportunity to import capital goods and equipment
required for pre-production, production, and post-production of exportable
items at a zero percent duty rate.
Deemed Exports
Deemed Exports" under the Foreign Trade Policy
pertain to transactions where the supplied goods remain within the country, and
payment for these supplies is received in either Indian rupees or free foreign
exchange.
The Deemed Export Scheme encompasses various
categories of supply, which include supplies by manufacturers and main or
subcontractors. These categories involve the supply of goods in scenarios such
as advance supply to Export Oriented Units (EOUs) and the supply of goods to
the United Nations or international organisations for their official use.
This scheme is designed to create a fair competitive
environment for domestic manufacturers in specific cases.
Within the Deemed Export Scheme, the supplier becomes
eligible for several benefits concerning the manufacturing and supply of goods,
which may include:
- Advance Authorisation / Advance Authorisation for annual requirements / Duty-Free Import Authorisation (DFIA)
- Deemed Export Drawback for Basic Customs Duty (BCD)
- Refund of terminal excise duty for excisable goods
Interest Equalization Scheme
(IES)
The Indian government has introduced the Interest
Equalisation Scheme for Pre and Post-Shipment Rupee Export Credit, targeting
eligible recipients. This scheme is effective from October 1, 2021, through
March 31, 2024.
To qualify for the benefits offered by the Interest
Equalisation Scheme, all exporters must obtain a Unique IES Identification
Number (UIN) from DGFT. The UIN granted will remain valid for one year from its
issuance date, during which exporters can submit an application to their
respective banks to avail the benefits of the Interest Equalisation Scheme.
Conclusion
By navigating the complexities of international trade
regulations and leveraging the benefits offered by the Directorate General of
Foreign Trade, businesses can not only enhance their global presence but also
contribute to India's economic growth.
The DGFT's various schemes provide a valuable platform for entrepreneurs and established companies alike to diversify their product portfolio, reach new markets, and ultimately thrive in the competitive world of international trade. This strategic approach not only encourages foreign exchange earnings but also promotes job creation and strengthens India's position in the global trade landscape.
As we move forward, businesses must explore the diverse range of DGFT schemes available, adapt to changing market dynamics, and harness the full potential of India's imports-exports ecosystem.
