Introduction of Export Incentives Schemes
The Government of India is providing incentives to the exporter. Because exports are building a strong economy. When we export any product, the government is providing incentives on the value of the order or consignment. Export Incentives Schemes is depend on the product.
List of Export Incentives Schemes
- Merchandise Export from India Scheme (MEIS)
- Advance Authorisation (AA)
- Duty Free Import Authorisation (DFIA)
- Export Promotion Capital Goods (EPGC)
- Deemed Exports
- Status Holder Certificate
- Interest Equalization Scheme (IES)
- Market Access Initiative (MAI) Scheme
- Duty Drawback
- Refund of Duties and Taxes on Exported Products (RoDTEP)
- Export Oriented Unites
- Export Credit Guarantee Corporation
Merchandise Export from India Scheme (MEIS)
- The MEIS was launched as an export incentive schemes for the export goods.
- The reward is given way of duty credit script to exporter.
- MEIS is notified by DGFT (Directorate General Foreign Trade) & Implemented by Ministry of commerce & Industry.
Duty Drawback Scheme
- Under the Duty Drawback Scheme (DBK), the exporter is given relief from customs duty and central practice duty levied on input components used in the manufacturing of exported goods.
- The admissible duty drawback amount is paid to the exporters by crediting them into their nominated bank account.
Advance Authorization Scheme (AA)
- The Advance Authorisation Scheme is a where import of inputs will be allowed duty free (After for wastage), If they are physically incorporated in the product be exported. An export obligation is usually set as a condition for issuing Advance Authorization.
- If any person who import any product, then assemble, fit, join & then export that product. So, exporter have not paid any import duty.
- Import product, then make it & export it. We get a duty-free benefit.
- On Import Product, we have not paid duty, because we will be exporting that.
Market Access Initiative (MAI) Scheme
- Market Access Initiative (MAI) Scheme is an export incentives schemes which is promote export of India or promoting Indian products.
- This scheme is formulated on focus product-focus country approach to evolve specific market & specific product through market studies.
- It is study on product & market. And, then enhancement of export through access study new market or increasing the share in existing market.
Export Promotion Capital Goods (EPCG)
- The objective of Export Promotion Capital Goods Scheme (EPCG) is facilities import of capital goods for producing high quality goods & services & increase competitiveness.
- EPCG Scheme allow import of capital goods for Pre-Production, Production, Post-Production at zero custom duty.
- Ex: If I am Importing spare parts of washing machine at total worth Rs.10000 & custom duty is 40%. So, I have to pay Rs.40000 Custom Duty.
- But, in this scheme, Government is supporting. So, we haven’t paid any single rupees, but we have to export 6 time in 6 years.
- So, 6 times of Rs.40000 is Rs.240,000 within 6 years. I have to export Rs.240,000 within 6 years. So, It can be easy for exporter to decrease his duty burden.
- Which types of capital goods we can import. Below have some examples,
- Computer system & software
- Sapre, Modules, dies, jig, fixture, tools & repertoires & many others.
RoDTEP (Remission of Duties or Taxes on Export Product) Scheme
- RoDTEP is a new export incentives scheme to replace existing MEIS Scheme for export goods from India.
- RoDTEP is a replacing all the taxes which is incurred on exporter like Mandi tax, Coal, Cess, Electricity Duties, Local Taxes used for transportation.
Export Oriented Units
- Under EOU Scheme, Units registered as a EOU are required to export their entire production of goods & services [Except permissible sales in Domestic Traffic Ares DTA].
- Trading unit are not covered in EOU.
Objective of Export Oriented Unit
- The main objective of interdiction of export-oriented unit scheme is increase export & increase foreign exchange earnings in the country & generate additional employment.
Risk Management
- Risk is also associated with goods to export in international market. Export risk is quite different from domestic market.
- It became an important factor for exporter taking an export measure of risk with a proper risk management.
Understanding in International Market
Various types of risk is facing by international trader faces like.
- Commercial risk
- Political Risk
- Rising arising foreign law
- Cargo Risk
- Credit Risk
- Foreign Exchange Fluctuation risk.
- We can see in another module, how can we deal with all risks.
Manage Risk in Export
How to Manage Payment Risk
- Main payment term in export is advance payment. Buyer is paid advance payment for placing an order. So, we also take a payment in advance.
- Mostly, Exporter is following this payment terms 30% in advance & 70% against document.
- Before rendering the services at the time of placement of an order cutdown administrative expenses & finance charges.
- This eliminates the risk of Non-Payment.
- Although this may be different for new business & exporter, it can be worked with little negotiation.
How to manage currency risk
- Currency risk is a type of risk which is occur in international trade.
- In International trade arises from the fluctuation of price from one currency against another currency.
- While doing business in foreign currency a contract is signed & company quotes or price for the goods using a reasonable exchange rate.
- These all thing which is managed by our bank. So, don’t worry.
How to manage goods risk.
- In export business, every exporter is facing damages, accident, fire of goods, Theft loss & Breakage in shipping goods.
- But before shipping goods to any buyer, Exporter have to buy all the insurance for his safety.
- The International Chamber of Commerce sets rules governing each party’s concerns in global exchange and their responsibilities with respect to shipping risks. It is good to follow the guidelines and take important precautions before taking any steps.
What is ECGC?
- ECGC A government of India is established to Indian is established to promote export. Import in our country provide a range of credit risk insurance cover to exporter against loss in export of goods.
ECGC (Export Credit Guarantee corporation)
- ECGC (Export Credit Guarantee Corporation) is a government insurance corporation.
- Objective of ECGC is enhance the competitiveness of Indian exports offering them credit insurance cover.
- ECGC has considered various export credit risk insurance product suiting the needs of Indian exporter.
Role of ECGC
- ECGC is helping to Indian exporter & Exporter recover bad debt.
- Providing information of the credit worthiness of foreign buyer.
- Make it easy to export finance from bank & other Institution.
- Making information available of different countries & rating.
- Provide all information related risk & responsibility in export activities.
Risk covered by ECGC
• ECGC provides credit risk cover to exporters against the risk of non-payment of credit by the overseas buyer, providing credit insurance cover to the bank against the principal risk of exporter assessment to the buyer for the purpose of underwriting.
Types of Policy by ECGC
- Export finance guarantee
- Packing Credit guarantee
- Post shipment export credit guarantee
- Export production finance guarantee
- Transfer guarantee
- Export performance guarantee
Export Insurance
- Export the product & services against the risk of non-payment by a foreign buyer.
- • It can reduce the payment risks associated with doing business internationally by giving the exporter a conditional assurance that payment will be made if the foreign buyer is unable to pay.
- Exporter can protect receivable against a variety of payment risk.
Goods Insurance
- Marine insurance is a cover the loss against the goods.
- Mariane insurance is product to loss & damages of ship, Cargo, Terminals & any Transport or cargo through which property is transferred.
- In short, marine insurance policies are designed to cover loss & damage caused to boat & boat & another watercraft.
Process of claim amount & settlement.
- Debt recovery agencies are companies who are collecting debts from who are not paid payment to exporter.
- There are many debt collection agencies in India.
- Some companies are specialising in collecting only certain type of debt.
- And, some companies are operating overall countries.
Debt Collection Agency
- MNS Credit management Group
- STA International
- Atradius
- Summitar
- PRA Group
- TKG-The Kaplan Group
- Rocket Receivable
- RFGI
- ENCORE Capital Group
- ACA International
- CFBB- Consumer Financial Protection Burau
- DGFT-Directorate General of Foreign Trade
- Ministry of commerce & Industry
- Government of India
In Detail DGFT Export Incentives Scheme