Export Promotion Schemes

Export promotion schemes in India are a set of government policies and incentive programmes designed to increase the competitiveness of Indian goods and services in international markets. These schemes aim to boost foreign exchange earnings, generate employment, and encourage value-added manufacturing by providing fiscal incentives, subsidies, and infrastructural support to exporters. The framework for export promotion is administered primarily by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry, along with specialised export promotion councils and sectoral boards.

Background and Objectives

Since independence, India’s trade policy has evolved from import substitution to a more open and export-oriented approach. The New Foreign Trade Policy (FTP) and periodic updates provide the strategic direction for export promotion. The key objectives of these schemes include:

• Enhancing export competitiveness through fiscal incentives and infrastructure development.
• Encouraging diversification of export products and markets.
• Promoting labour-intensive and high-technology sectors.
• Integrating Indian industries with global value chains.
• Reducing procedural barriers and transaction costs for exporters.

The government’s policies are aligned with broader initiatives such as Make in India, Atmanirbhar Bharat, and Ease of Doing Business, aiming to transform India into a global manufacturing and export hub.

Major Export Promotion Schemes in India

Several export promotion schemes have been implemented under the Foreign Trade Policy (FTP 2015–20) and its succeeding framework. The most significant among them are as follows:

1. Merchandise Exports from India Scheme (MEIS)

The MEIS was introduced to offset infrastructural inefficiencies and associated costs involved in exporting goods. Exporters received duty credit scrips, usually ranging between 2% to 5% of the free-on-board (FOB) value of exports, which could be used for payment of customs duty, excise duty, or service tax.

• Applicable to exports of notified goods to notified countries.
• The scheme aimed to promote diversification of export markets and products.
• It was replaced in 2021 by the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme following WTO compliance requirements.

2. Service Exports from India Scheme (SEIS)

The SEIS was launched to encourage export of services from India. It provided duty credit scrips to service exporters based on the net foreign exchange earned, typically ranging from 3% to 7%. Eligible sectors included professional services, healthcare, IT, and education.

• The benefits were available only to service providers located in India.
• The scheme’s scope was revised under the new trade policy framework to focus on knowledge-based sectors and digital exports.

3. Remission of Duties and Taxes on Exported Products (RoDTEP)

Introduced in January 2021, the RoDTEP scheme replaced the MEIS to align India’s export incentives with World Trade Organization (WTO) norms.

• It refunds embedded taxes and duties that are not refunded under other mechanisms, such as electricity duty, mandi tax, and fuel used in transportation.
• Refunds are provided as transferable electronic scrips credited to exporters’ accounts.
• The scheme enhances export competitiveness by ensuring zero-rating of taxes on exports.

4. Rebate of State and Central Taxes and Levies (RoSCTL)

The RoSCTL scheme, implemented in 2019, provides rebates on central and state taxes for the textile and apparel sector.

• It replaces the earlier Rebate of State Levies (RoSL) and is aimed at improving cost competitiveness in global markets.
• Benefits include rebates on embedded taxes such as VAT on fuel, electricity duty, and mandi tax not refunded through GST.

5. Export Promotion Capital Goods (EPCG) Scheme

The EPCG scheme allows exporters to import capital goods at zero customs duty for producing goods meant for export.

• The importer must fulfil an export obligation, typically equivalent to six times the duty saved, within a specified period (usually six years).
• It aims to upgrade technology and improve production capacity for export-oriented industries.

6. Advance Authorisation Scheme (AAS)

Under the Advance Authorisation Scheme, exporters are permitted to import inputs required for manufacturing export products duty-free.

• The quantity of inputs is determined based on standard input-output norms.
• Exporters must fulfil a corresponding export obligation within a stipulated timeframe.
• The scheme helps reduce production costs and enhance competitiveness.

7. Duty Drawback Scheme

The Duty Drawback Scheme refunds customs and excise duties paid on imported inputs or raw materials used in the manufacture of export goods.

• Drawbacks are calculated either on an all-industry rate (standard rate notified by the government) or a brand rate (specific to individual manufacturers).
• The scheme ensures that taxes do not add to the export price of goods, maintaining parity with global competitors.

8. Export Oriented Units (EOUs), SEZs and EPZs

These schemes provide a conducive environment for export-led industrial growth.

• Export Oriented Units (EOUs): Units that export 100% of their production are granted benefits such as duty-free import of raw materials, capital goods, and exemption from industrial licensing.
• Special Economic Zones (SEZs): SEZs are designated areas treated as foreign territory for trade operations, offering incentives such as tax holidays, duty-free imports, and simplified customs procedures.
• Export Processing Zones (EPZs): Precursors to SEZs, EPZs were developed to promote manufacturing for exports with infrastructure and fiscal benefits.

9. Deemed Export Benefits

“Deemed exports” refer to goods manufactured in India and supplied to specific categories such as Export Oriented Units, projects funded by international agencies, or defence procurement.

• Benefits include duty drawback, advance authorisation, and refund of terminal excise duty.

Sector-Specific and Supporting Initiatives

In addition to the major schemes, India implements several sector-specific initiatives to boost exports in targeted industries:

• Transport and Marketing Assistance (TMA) Scheme – Provides subsidies on freight and marketing costs for agricultural exports.
• Interest Equalisation Scheme (IES) – Offers interest rate subvention to exporters in the manufacturing and MSME sectors.
• Market Access Initiative (MAI) and Market Development Assistance (MDA) – Support exporters in exploring new markets through trade fairs, exhibitions, and branding activities.
• Towns of Export Excellence (TEE) – Recognises clusters with export potential (e.g., textiles, handicrafts, engineering goods) and extends infrastructure and marketing support.

Institutional Mechanisms

The implementation of export promotion schemes involves coordination among multiple agencies:

• DGFT (Directorate General of Foreign Trade) – Formulates and administers the Foreign Trade Policy.
• Export Promotion Councils (EPCs) – Represent specific sectors such as engineering, textiles, and chemicals, providing market intelligence and certification services.
• Commodity Boards – Promote exports of commodities such as tea, coffee, spices, and rubber.
• Indian Trade Promotion Organisation (ITPO) – Organises trade fairs and exhibitions to promote Indian exports globally.

Challenges and Policy Considerations

Despite robust policy mechanisms, several challenges affect the performance of export promotion schemes:

• Compliance with WTO rules: Some schemes, particularly those offering direct subsidies, have faced challenges under global trade rules.
• Administrative complexity and delays in processing duty scrips or rebates.
• Infrastructure bottlenecks, high logistics costs, and limited port connectivity affecting competitiveness.
• Lack of awareness among small and medium enterprises regarding eligibility and procedures.
• Global economic fluctuations and protectionist measures in importing countries.

Efforts are being made to rationalise schemes, simplify procedures through the DGFT online portal, and enhance logistics efficiency through the National Logistics Policy.

Significance and Future Outlook

Export promotion schemes have been pivotal in transforming India’s trade performance, diversifying its export base, and integrating domestic industries with global markets. Going forward, policy emphasis is likely to be placed on:

• Strengthening the RoDTEP and RoSCTL frameworks for greater tax neutrality.
• Promoting digital exports and services trade.
• Expanding sector-specific incentive programmes under a WTO-compliant regime.
• Encouraging green and sustainable exports in line with global climate commitments.