by Export incentives are measures provided by the government to encourage and support exporters in promoting their goods and services in foreign markets. These incentives can be broadly categorized into two categories: financial incentives and non-financial incentives.
Financial Incentives:
- Merchandise Export Incentive Scheme (MEIS): MEIS provides exporters with duty credit scrips equivalent to a certain percentage of the FOB (Free on Board) value of their exports. These scrips can be used to pay customs duties on the import of goods, or can be sold in the market for cash.
- Service Export Incentive Scheme (SEIS): SEIS provides service exporters with duty credit scrips equivalent to a certain percentage of the net foreign exchange earned by them. These scrips can be used for payment of service tax, or can be sold in the market for cash.
- Export Promotion Capital Goods (EPCG) Scheme: This scheme provides duty exemption on import of capital goods and raw materials for the manufacturing of export goods. The duty exemption is provided on the condition that the exporter will fulfill the export obligation within a specified period.
- Interest Equalization Scheme (IES): This scheme provides exporters with an interest rate subsidy of 3% on pre- and post-shipment rupee export credit. The subsidy is provided to reduce the cost of credit for exporters and make them more competitive in international markets.
Benefits:
- Enhances competitiveness: Financial incentives such as MEIS, SEIS, and IES reduce the cost of production and make Indian goods and services more competitive in the international market.
- Increases export volumes: Financial incentives encourage exporters to explore new markets and increase export volumes, thereby increasing foreign exchange earnings for the country.
- Reduces export credit risk: The ECGC cover reduces the export credit risk for exporters by providing export credit insurance, which protects them against payment and political risks associated with export transactions.
- Provides access to capital goods and raw materials: The EPCG scheme provides duty exemption on import of capital goods and raw materials, making them more affordable for exporters.
Non-Financial Incentives:
- Market Access Initiative (MAI) and Market Development Assistance (MDA): These schemes provide financial assistance to Indian exporters for organizing trade fairs, exhibitions, and buyer-seller meets in foreign countries, and to undertake market surveys and studies to identify new markets.
- Focus Product Scheme (FPS): This scheme incentivizes the export of specific products by providing duty credit scrips of up to 5% of the FOB value of the exported products.
- Duty-free import of raw materials: Under the EPCG scheme, import of capital goods and raw materials are exempted from customs duty for the manufacturing of export goods.
- Export Credit Guarantee Corporation (ECGC) Cover: The ECGC provides export credit insurance cover to protect exporters against payment risks and political risks associated with export transactions.
Benefits:
- Helps exporters to identify new markets: Market Access Initiative (MAI) and Market Development Assistance (MDA) provide financial assistance to exporters to participate in trade fairs, exhibitions, and buyer-seller meets in foreign countries. These events provide an opportunity for exporters to network with foreign buyers and explore new markets.
- Promotes export of specific products: Focus Product Scheme (FPS) incentivizes the export of specific products, thereby promoting the export of these products and improving their competitiveness in the global market.
- Encourages innovation: Non-financial incentives such as Technical Upgradation Fund Scheme (TUFS) and Duty-Free Import Authorization (DFIA) scheme provide incentives to exporters to upgrade their technology and manufacturing processes, which helps in innovation and improves product quality.
