EXPORT INCENTIVES

• DGFT is the nodal body formulating the

Export Import Policy.

• It works under the Ministry of Commerce.

• DGFT perform its functions in coordination

with state governments and all the other
departments of Ministry of Commerce and
Industry, Government of India.
• DGFT is a government organization in India
responsible for the formulation of exim
guidelines and principles for Indian importers
and Indian exporters of the country.

• DGFT has several offices in various parts of the

country which issues licenses, incentives etc
based on the policy formed by the headquarters
at Delhi.

• Before 1991, DGFT was known as the Chief

Controller of Imports & Exports (CCI&E).
DGFT Offices in India
DGFT New Delhi DGFT Vadodara
DGFT Chennai DGFT Kanpur
DGFT Kolkata DGFT Bangalore
DGFT Mumbai DGFT Jaipur
DGFT Bhopal DGFT Amritsar
DGFT Chandigarh DGFT Jammu
DGFT Cochin DGFT Dehradun
DGFT Coimbatore DGFT Panjim
DGFT Cuttack DGFT Raipur
DGFT Ludhiana DGFT Gauhati
DGFT Moradabad DGFT Shillong
DGFT Panipat DGFT Kochi
DGFT Patna DGFT Trivendrum
DGFT Pune DGFT Hyderabad
DGFT Rajkot DGFT Madurai
DGFT Ahmedabad DGFT Pondicherry
DGFT Surat DGFT Vishakhapatnam
Main Function

 Preparation, formulation and implication

of Exim Policies is one of the main
functions of DGFT.
Other Functions
• DGFT is also responsible for issuing IEC or Import
Export Code.

• DGFT also play an important role in controlling

DEPB Rates

• Setting standard input-output norms is also

controlled by the DGFT.

• DGFT permits or regulate Transit of Goods from

India or to countries adjacent to India in accordance
with the bilateral treaties between India and other
countries.
• Any changes or formulation or addition of
new codes in ITC-HS Codes are also carried
out by DGFT

• It also deals with the quality complaints of

the foreign buyers

• Officials DGFT works in close coordination

with other related economic offices like
Customs Commission rates, Central Excise
authorities, DRI authorities.
• DGFT has a commitment to function as a
facilitator of exports and imports.

• Their focus is on good governance, which

depends on clean, transparent and accountable
delivery systems

• The office of the Director General of Foreign

Trade has opened a chat window on its website
for interacting with the trade and industry to
reply to queries on the Foreign Trade Policy.
This web based interface would be held from
3.00 pm to 5.00 pm on the second Wednesday
of every month.
 Government of India gives various incentives
to exporters in order to improve their
competitiveness in the foreign markets.

 These incentives and facilities relate to

export performance, promotion of exports,
fiscal incentives, schemes aimed at
facilitation of imports for exports and various
subsidies.
 Duty drawback
 Duty entitlement pass book scheme
 Status holder exporter scheme
 Export Promotion capital goods scheme
 Market access initiative
 Market development assistance
 Served from India scheme
 Vishesh Krishi Upaj Yojana (special
agricultural produce scheme)
Duty drawback
 It refers to the refund in respect of central
excise and customs duties paid in respect of
raw materials and other inputs used in the
manufacture of the product prior to its export.

 Exporters can claim the amount of duty

drawback as soon as the exports of goods
take place.
 Drawback rates
1. All industry rates
2. Brand rate
3. Special Brand rate
 Filing Duty Drawback: The processing of
drawback is done by customs authorities
after the required documents are filled

 Time for Claiming Drawback Claim: Within

3 months from the date of LET EXPORT
ORDER.

 Payment of duty drawback: within a period

of one month from the date of receipt of the
claim.
Duty entitlement pass book scheme
 The objective of the DEPB is to neutralize the
incidence of Customs duty on the import
content of the export product.

 Under the DEPB scheme, an exporter may

apply for credit, as a specified percentage of
FOB value of exports, made in freely convertible
currency.

 The Credit is granted against such export

products and at such rates as may be specified
by the Director General of Foreign Trade.
• Under the post-export DEPB, which is issued
after exports, the exporter is given a duty
entitlement Pass Book at a pre-determined
credit on the FOB value.

• The claim for the import duty credit is

admissible only after the realisation of the
export proceeds.

• The exporter can use this credit to pay for

the import duty on the imports of inputs
whether required for the manufacture of the
export product or not.
 DEPB is valid for a period of 24 months from the
date of its issuance.

 Application should be within 180 days from the

date of exports or within 90 days from the date
of realization, whichever is later.

 The DEPB and/or the items imported against it

are freely transferable.

 It should be noted that the imports under DEPC

should be made from the same port from where
the exports have been made
Export Promotion of capital
goods Scheme (EPCG)
 EPCG scheme was introduced in order to enable
manufacturer exporter to import machinery and other
capital goods for export production at concessional or
no custom duties at all.

 Facility is subject to export obligation i.e. the exporter is

required to guarantees exports of certain minimum
value.
• EPCG allows of capital goods for production at 5 %
custom duty subject to an export obligation equivalent
to 8 times of duty saved on capital goods imported
under EPCG scheme to be fulfilled over a period of 8
years reckoned from date of issue of licence.

• However, in respect of EPCG licences with a duty saved

of Rs.100 crore or more, the same export obligation
shall be required to be fulfilled over a period of 12
years.

• Licences are issued, under this scheme by the director

general of foreign trade or his regional officers
depending upon the value of the licence
 To aid technological upgradation of the
export sector, EPCG Scheme at Zero Duty
has been introduced in the foreign trade
policy 2009-14.
Status holder exporter scheme
 This scheme provides for recognition of exporters as
export house, star export house, trading house, star
trading house and premier trading house on the basis
of their export performance in the current year plus
previous 3 years.
Category Export performance ( in Rupees)
Export house 20 Crore
Star export house 100 crore
Trading house 500 Crore
Star trading house 2500 crore
Premier Trading house 10,000 Crore
Status holders shall be eligible for the following facilities:

• Licence/certificate/permissions and Customs clearances

for both imports and exports on self-declaration basis.

• Exemption from compulsory negotiation of documents

through banks. The remittance, however, would
continue to be received through banking channels;

• 100% retention of foreign exchange in EEFC (Exchange

earners foreign currency) account;

• Entitlement for consideration under the Target Plus

Scheme

• Exemption from furnishing of Bank Guarantee as

required in various Schemes under this Policy.
• All kinds of exporters namely, merchant
exporters, manufacturer exporters, service
exporters, SEZ units, 100% EOUs , Bio
technology park units, etc are eligible to apply
for status as export house.

• Validity Period: 3 years starting from 1st April

of the licensing year during which the
application is made for the grant of recognition.

• On expiry application for renewal to be made

within 6 months of expiry.
Market access initiative
• Financial Assistance.

• Who is eligible for assistance under the

scheme ?
• A wide range of activities can be funded under
the MAI scheme.

• Range of Financial assistance provided

MARKETING DEVELOPMENT
ASSISTANCE

• The main thrust is to provide for development

of marketing of Indian products and
commodities in foreign markets by providing
grants in aid for the eligible marketing activities
to the eligible exporters.

• The eligible exporters can participate in these

schemes either directly or through export
promotion councils, India trade promotion
Organisation etc.
• Eligibility of exporters:
The exporter should have an annual export
turnover of upto Rs 5 crores

• The grant under MDA is in the form of non-

refundable financial assistance given to the
exporters by way of reimbursement of the actual
expenditure incurred by them subject to the
scale of grants laid down under the scheme

• The application for the grant of MPA should be

made to the concerned Export promotion
council within 3 months of the activity
Marketing Activities and the scale of
Assistance
Sales cum Study Tour Abroad:
 Maximum 90% of the Actual Fare for SSI
exporters and 75% for other than SSI exporters
subject to a limit of Rs 60,000/- for travel in
economy class for all class of exporters.

Participation in fairs/Exhibitions abroad:

 Maximum 90% of the total expenditure incurred on
items of expenditure viz., air travel in economy
class, space rent, decoration, electricity,
interpreters, etc. in case of SSI Exporters and 75%
of total expenditure in the case of non-SSI
exporters subjected to the maximum of Rs.
90,000/- in all the cases.
 Publications/Publicity (for bringing out publications for use
abroad and insertion of advertisement in the foreign media to
promote brand publicity:
Maximum of Rs. 50,000/- in financial year or 25% of the actual cost,
whichever is less.

 Research and Product Development:

50% of expenditure approved for this activity by the Office of the Dy.
Director (EAC), Ministry of Commerce, Udyog Bhawan, New Delhi
.
 Opening of Foreign Office:
For the first year, 25% of the salary of the staff (One senior and one
junior) and 20% of the office rent.

 Opening of warehouse: Grant at the rate of 25% for three years.

Served from India Scheme
• This scheme is aimed at promoting services exports from India
by providing incentives exclusively for the exporters of
services.

• All Service providers who have a total foreign exchange

earning of at least Rs.10 lakhs in the preceding or current
financial year shall be eligible to qualify for a duty credit
entitlement.

• For individuals who are service providers, the total foreign

exchange earned criteria would be Rs.5 lakhs in the preceding
financial year.

• The duty credit entitlement is 5% in the case of hotels, 20% in

the case of stand alone restaurants and 10% incase of service
providers in the healthcare, education & other sectors.
• Duty credit entitlement may be used for import
of any capital goods including spares, office
equipment and professional equipment, office
furniture and consumables, provided it is part of
their main line of business.

• In the case of hotels and stand-alone

restaurants, the duty credit entitlement may also
be used for the import of food items and
alcoholic beverages.

• The entitlement and the goods imported shall be

non-transferable.
 Vishesh Krishi Upaj Yojana
• This is an initiative for the promotion of export of
agricultural products.

• The objective of the scheme is to promote export of

fruits, vegetables, flowers, minor forest produce, and
their value added products, by incentivising exporters of
such products.

• Exporters of such products shall be entitled for duty

credit scrip equivalent to 5% of the FOB value of
exports.

• The scrip and the items imported against it would be

freely transferable.
Industrial Raw Material Assistance
centers
• IRMAC is established by the government
of India as a subsidiary of STC.

• Such centers import raw material in bulk

and supply them to registered exporters
against valid import valid license.

• This enables exporters to get timely supply

of raw material at reasonable prices.

• Back to Back letter of credit

Duty free import authorisation
scheme
• DFIAS is a kind of licence which allows duty
free imports for export production.

• Imports made under this authorisation

scheme are exempted from basic customs
duty, additional customs duty, anti-dumping
duty.

• DFIAS enables exporters to import the

required inputs before exports
 Tax benefits
• VAT paid on raw material used in manufacture
of  goods for export would be refunded by the
State Government in cash adjustment. 

• The exports would become more competitive in

the world market as there would be no tax
henceforth on raw material used for
manufacture of goods for export. 

• Tax holiday is provided for 10 years for newly

established undertakings in SEZs, 100% EOUs
etc.
Export Financing
 Commercial banks provide loans to the
exporters at the concessional rates of
interest against export order both at the
pre-shipment & post shipment stage.

 The commercial banks are provided with

the refinance facility by the RBI and
EXIM bank
Period of credit Rate of interest
1) Pre- shipment credit upto 180 Not exceeding PLR minus 2.5%
days points
2) Beyond 180 days and upto 270 Not exceeding PLR minus 0.5%
days points
3) Beyond 27 days and upto 360 Rate of interest as may be fixed by
days the bank
 The Export- Import Bank of India (Exim
Bank) provides financial assistance to
promote Indian exports through
• Direct financial assistance
• Overseas investment finance
• Term finance for export production and
export development,
• Pre-shipping credit
• Buyer's credit
• export bills rediscounting
• refinance to commercial bank
Facilities provided by
APEDA/MPEDA
• The agriculture and processed foods
export development authority provides
financial assistance for the development &
promotion of export of agricultural,
horticultural & meat product.

• Marine products export development

authority provides financial assistance to
the exporters of marine products
Exchange Earner’s foreign
currency account
 The EEFC account is a special type of current
account aimed at exporters / individual
professionals who receive eligible remittances
in foreign currency as per FEMA regulations.

 The account is maintained in foreign currency,

shielding account holders from exchange rate
fluctuations.
Features of EEFCA
 The account can be maintained by any
exporter with any designated branch of SBI
\public sector banks in India

 It can be maintained in any of the permitted

currencies

 No credit facility is allowed against the security

of funds held in the account

 Funds can be freely converted into Rupees at

the market determined rates.