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EXPORT SUBSIDY

PRESENTED BY NITESH PANDEY PRATIK KAREL SHREYA

Categories
Incentives linked to Export Performance Incentives for marketing of Export Goods Fiscal Incentives Import facilitation for Exports Export Financing Foreign Currency Retention

INCENTIVES FOR MARKETING OF EXPORT GOODS


Market Access Initiative Marketing Development Assistance Air freight subsidies on export of horticulture and floriculture products Assistance for product promotion and packaging development schemes of the Spices Board Subsidy schemes of APEDA & MPEDA

FISCAL INCENTIVES
Exemption from Sales Tax/VAT Exemption from Income Tax Exemption from Service Tax

INCENTIVES FOR MARKETING OF EXPORT GOODS

1. Market Access Initiative


Financial assistance is given for the following activities Marketing studies on country/product focus approach basis Participation in sales promotion campaigns Publicity campaigns Participation in international trade fairs Promotions of selected brands Transport subsidies for agriculture products Registration charges for some product registration abroad Inland freight subsidies Setting up of Business Centre in Indian mission abroad for visiting Indian exporters

Organizations eligible for grant of assistance under MAI


Export Promotion Councils Industry and Trade associations Units in small scale, cottage and handicraft sectors

Financial Assistance
Varies from 25% to 100% of the total cost depending upon the activity and the implementation agency

2. Marketing Development Assistance


GOI introduced the scheme of MDA in 1963. Main thrust is development of marketing. Eligible exporters can participate either directly or through EPCs

Eligibility
The amount of FOB value of export should not exceed Rs. 10 Crore in preceding licensing year Its membership of EPC should complete 12 months

Financial Assistance
Assistance available to meet the cost of travelling expenses and stall charges to cover the cost of participation in the approved event

Scale of financial assistance


S.N Area/Sector No. of visits Max financial ceiling per event

1
2 3 4

LAC
AFRICA CIS ASEAN

1
1 1 1

Rs. 180000
Rs. 150000 Rs. 150000 Rs. 150000

General Areas

Rs. 250000

3. Air freight subsidies on horticulture and floriculture exports


APEDA provides air subsidy on selected fruits, vegetables and floriculture exports: Product Coverage Fresh Fruits: mangoes, banana, strawberry, papaya, watermelon Fresh Veg: asparagus, brocolli, mushroom Floriculture: cut flowers, live plants/bulbs, gladiolus and other live plants

Quantum of subsidy
Export markets West Asia, SE Asia and CIS countries Rate of subsidy Least of following: 1. Rs. 6 per kg 2. 25% of air freight rate(IATA) 3. 1/3rd of FOB value

North America, far east countries and Europe other than CIS countries

Least of following: 1. Rs. 10 per kg 2. 25% of air freight rate(IATA) 3. 1/3rd of FOB value

4. Facilities offered by Spices Board


Spice board provides various facilities for the marketing of spices to the exporters of spices. Exporters having Spice House certificate or Spice Board logo are eligible for the financial assistance

Financial Assistance
Nature of activity Product promotion of branded goods Mutilingual printing/distribution of brochure Packaging development/bar coding registration Financial assistance Min of: 5 lac or 50% of total Expenditure Min of: 1 lac or 50% of printing cost Min of: 2 lac or 50% of actual cost

The above assistance is provided by the spice board Reimbursement of air freight/ courier Max of 25,000 per exporter per year by for sending samples way of reimbursement of the expenditure charges incurred by the laboratory Setting up/up gradation ofexporters Min of: 1 lac or 50% of cost of equipment
Facilities for monitoring pesticide residue ISO/IS 9000 quality system Min of: 2 lac or 50% of cost of equipment Min of: 2lac or 50% of certification charges

Technology transfer and process up gradation


Research and development

Min of: 10 lac or 25% of cost of up gradation


Min of: 2 lac or 50% of cost of research programme

5. Facilities offered by APEDA/MPEDA


APEDA provides financial assistance for the development and promotion of export of agriculture, horticulture and meat products. Various schemes for assistance are:
Development of infrastructure Market/packaging development Quality control assistance Upgradation of meat plants Organization building and HR development

The MPEDA provides financial assistance under the following schemes Infrastructure development Prawn farming Diversification and modification Quality control Marketing services

Financial assistance
Nature of activity Scale of assistance Undertaking feasibility studies and market Min of: 5 lac or 50% of cost of study surveys Purchase of specialized transport units Min of: 2.5 lac or 25% of capital cost

Vapour heat treatment equipment etc.


Brand publicity Participation in trade fairs Packaging development Specialized consultancy services towards installation of ISO 9000 QC system Upgradation of technical skills of supervisory or managerial personnel through training in india

Min of: 25 lac or 50% of cost


Min of: 50 lac or 25% of total cost To be decided for each fair Min of: 5 lac or 25% of the cost Min of: 2 lac or 50% of the cost Max of 50% of the cost of approved training programme

FISCAL INCENTIVES

Exemption from Sales Tax/VAT


Exporters are eligible to claim exemption from the levy of sales tax on the supplies taken by them for the manufacture of goods meant for production of export product or supplies of goods for exports against specific export orders. Facility available under both Central Sales Tax Act 1956 and Under the Local Sales Tax Acts of the specific states. Exporter is required to give FORM H to the suppliers of goods from another state and the exemption form within the state.

Exporter is required to pay the VAT and later claim its refund. Exporters are entitled to full reimbursement of CST paid by them on the purchases made by them from within the state in which they are located for the purpose of production of goods meant for exports.

Income tax exemption


Previously exporters incomes were eligible for deductions u/s 250 HHC. Since the assessment year 2005-06, the deductions under this section has completely been withdrawn. Under sec 10A, tax holiday has been provided for 10 years beginning from assessment year 200002 which includes 100% export oriented units. Basic condition is that the export proceeds must be realised in free foreign exchange

Service tax exemption


Remission in service tax is allowed to export of goods and services to export units All services rendered abroad and charged on exports from india would be exempted from payments of service tax Similarly, S.Tax on services rendered in india but utilized by exporters would be exempted or remitted

RECOGNITION OF EXPORTERS: STATUS HOLDERS


As per Foreign Trade Policy 2009-14, exporters are given recognition:
CATEGORY EXPORT HOUSE STAR EXPORT HOUSES TRADING HOUSES STAR TRADING HOUSES PREMIER TRADING HOUSES EXPORT PERFORMANCE(Rs.) 20 CRORE 100 CRORE 500 CRORE 2500 CRORE 7500 CRORE

FACILITIES GIVEN TO STATUS HOLDERS


They shall get all kind of licenses/certificates/permission and obtain custom clearance for both exports and imports on self declaration basis. They shall be exempted from compulsory negotiation of documents through banks. They are allowed to retain 100% of the exports in Exchange Earners Foreign Currency Accounts. The period for repatriation of exports proceeds is enhanced to 360 days from 180 days. Exempted fro, submitting bank guarantee as required in various scheme of F.T.P. Shall be given 10% of the value of agriculture exports provided they use them for duty redemption on imports of cold storage etc.

IMPORT FACILITATION FOR EXPORTS


POLICY Export Promotion Capital Goods Scheme for the period 2009-2014 (updated as on 23.08.2010) has been announced in the Foreign Trade Policy. This Scheme allows the import of New & Secondhand Capital Goods, as well as computer software systems at concessional rate of Custom Duty by undertaking export obligation by the Exporters.

Export Promotion Capital Goods Scheme


Government has announced Zero Duty EPCG Scheme for certain product groups. This Scheme will be in force till 31.03.2012. This Scheme is applicable to Sectors of : 1) Engineering 2) Electronic Product 3) Basic Chemicals & Pharmaceuticals 4) Apparel & Textiles 5) Plastic 6) Handcraft 7) Chemical & Allied Products 8) Leather & Leather Products 9) Paper & Paperboard and articles thereto 10) Ceramic Products 11) Refectories 12) Glass & Glass ware 13) Rubber & articles thereto 14) Plywood & allied products 15) Marine Products 16) Sports goods & toys.

ADVANCE AUTHORIZATION SCHEME


It allow duty free import of inputs, which are physically incorporated in the export product (making normal allowance for wastage). In addition, fuel, oil, energy, catalysts etc. which are consumed/utilised in the course of their use to obtain the export product, may also be allowed under the scheme. Duty free import of mandatory spares upto 10% of the CIF value of the Authorization which are required to be exported/ supplied with the resultant product may also be allowed under Advance Authorization.

Duty Free Import Authorization (DFAI) Scheme


A Duty Free Import Authorization is issued to allow duty free import of inputs which are used in the manufacture of the export product (making normal allowance for wastage), and fuel, energy, catalyst etc. which are consumed or utilised in the course of their use to obtain the export product. The Authorisation shall be issued on the basis of inputs and export items given under Standard Input and Output Norms (SION). The import entitlement shall be limited to the quantity mentioned in SION. Duty Free import of mandatory spares upto 10% of the CIF value of Authorisation which are required to be exported/supplied with the resultant product may also be allowed under the scheme.

FTWZ (Free Trade and Warehousing Zones)


FTWZ (Free Trade and Warehousing Zones) is a policy of the Government of India (GoI). It was announced in the Foreign Trade Policy 2004-09 to set up Free Trade and Warehousing Zones (FTWZ) to create trade related infrastructure to facilitate the import and export of goods and services with freedom to carry out trade transactions in free currency. On June 23, 2005, the Parliament of India passed the Special Economic Zones Act 2005 and on February 10, 2006 Government of India notified Special Economic Zone Rules 2006. The Free Trade and Warehousing Zones (FTWZ) is a special category of Special Economic Zone and is governed by the provisions of the SEZ Act and the Rules. The objective is to create trade-related infrastructure to facilitate the import and export of goods and services with freedom to carry out trade transactions in free currency.

Entitlement
(i)
Income Tax exemption as per 80 IA of the Income Tax Act.

(ii) (iii)

Exemption from Service Tax. Free foreign exchange currency transactions would be permitted.

Export Oriented Unit (EOU)


The Export Oriented Unit (EOU) Scheme, which had been introduced in the early 1980s remains in the forefront of countrys export production schemes. 100% EOUs fall into 3 categories (a) EOUs established anywhere in India and exporting 100% products except certain fixed percentage of sales in the Domestic Tariff Area (DTA) as may be permissible under the Policy. (b) Units in Free Trade Zones in Special Economic Zones (SEZs) and exporting 100% of their products. (c) EOUs set up in Software Technology Parks (STPs) and Electronic Hardware Technology Parks (EHTPs) of India for development of Software & Electronic Hardware.

Special Economic Zone (SEZ)


A Special Economic Zone (SEZ) is a geographical region that has economic and other laws that are more freemarket-oriented than a country's typical or national laws. "Nationwide" laws may be suspended inside a special economic zone. The category SEZ covers, including free trade zones (FTZ), export processing Zones (EPZ), free Zones (FZ), industrial parks or industrial estates (IE), free ports, free economic zones, urban enterprise zones and others. Usually the goal of a structure is to increase foreign direct investment by foreign investors, typically an international business or a multinational corporation (MNC), development of infrastructure and to increase the employment.

EXPORT FINANCE
Export Credit comes under the Priority Sector Lending for only Foreign banks. Target( As per R.B.I) 12 per cent of ANBC or credit equivalent amount of Off-Balance Sheet Exposure, whichever is higher. No targets for SCBs.

Classification
Pre-Shipment Finance To meet the working capital requirement of exporters. Eligible exporters procure raw material, supplies, process or manufacture or warehouses or ship the goods meant for export.

Post Shipment Finance


Available after the shipment of goods. Can be long term or short term finance. Classification Advance against export bills sent on collection basis. Advances against export on consignment basis. Advances against receivables of Govt. of India. Advances against retention money relating to exports. Advances against approved deemed exports. Negotiation/ Payment/ Acceptances of export document against L/C Purchases / Discount of export bills sent on collection basis.

FOREIGN CURRENCY RETENTION


Exchange Earners' Foreign Currency Account (EEFC) is an account maintained in foreign currency with an Authorised Dealer i.e. a bank dealing in foreign exchange. It is a facility provided to the foreign exchange earners, including exporters, to credit 50 per cent of their foreign exchange earnings to the account, so that the account holders do not have to convert foreign exchange into Rupees and vice versa, thereby minimizing the transaction costs.

Permissible credits into this account


i) Inward remittance through normal banking channels, other than remittances received on account of foreign currency loan or investment received from abroad or received for meeting specific obligations by the account holder. ii) Payments received in foreign exchange by a 100 per cent Export Oriented Unit or a unit in (a) Export Processing Zone or (b) Software Technology Park or (c) Electronic Hardware Technology Park for supply of goods to similar such units or to a unit in Domestic Tariff Area; iii) Payments received in foreign exchange by a unit in the Domestic Tariff Area for supply of goods to a unit in the Special Economic Zone (SEZ);

THANK YOU

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