Types of Export Incentives Scheme in India: All You Need to Know

Exports contribute to the creation of jobs, the expansion of foreign exchange reserves, and the reduction of the current account deficit. These are the primary motivations for the Indian government to implement export incentive programs. Here's a comprehensive overview of the numerous export incentives offered by the Indian government to promote exports.

Export Incentives Scheme in India: For Products

1. Merchandise Export from India Scheme (MEIS)

The MEIS scheme, which issued duty credit scrips as export benefits, was launched by the Indian government to reimburse exporters for tariffs paid. The export incentive was calculated as a fixed percentage of the FOB value of the notified items and ranged between 2%, 3%, 5%, and 7% of the FOB value, based on three market segments as listed in Appendix 3B.

With effect from January 1, 2021, the MEIS program has been replaced with the RoDTEP system, which is WTO-compatible.


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

The RoDTEP Scheme, which is intended to replace the MEIS scheme, intends to provide export benefits in India by reimbursing exporters for duties that are neither credited nor refunded. Such duties include:

A. Fuel used for the following reasons attracts excise duty and VAT:

  • Expenses for travel borne by you
  • Machines and plants are in operation
  • DG sets or power plants for electricity generation

B. On export paperwork, stamp duty is paid.

C. Electricity Duty paid for the purchase of electricity.

D. Property Tax/ Mandi Tax/ Municipal Tax GST [Compensation Cess/CGST/SGST/IGST], credit of which is forbidden on specific commodities such as food, drinks, works contract services, passenger transportation, and so on.

Certain groups, however, are no longer eligible to participate in this programme. For more details contact us.

3. EPCG Scheme

Another Indian export incentive scheme is the EPCG scheme, which allows an importer with an export business to import capital goods without paying customs duty on the condition that exports equal to 6 times the duty saved on the import of such capital goods are made within 6 years of the authorization being issued.

Export Promotion Capital Goods are capital commodities that are used to make goods that are exported to other countries. Molds and dies, jigs, tools, fixtures, and spares (including refurbished/reconditioned) are examples of such commodities.

The applicant must apply for the EPCG license with the licensing body, the Director-General of Foreign Trade. The following documents must be presented in self-certified copies:

  1. PAN card
  2. Digital signature
  3. GST registration certificate
  4. Excise registration
  5. Registration certificate from the tourism department
  6. Import Export Code (IEC)
  7. And other documents.

Export Incentives Scheme in India: For Services

Service Exports from India Scheme (SEIS)

Export incentives are granted to service exporters in the form of transferable Duty Credit Scrips based on a percentage of net Foreign Exchange gained in a financial year on the export of qualifying services. These duty credit scrips can then be used to pay Basic Customs Duty and other duties indicated in FTP 2015-20, paragraph 3.02.

A service provider that is a partnership firm, LLP, or business must have a minimum net free foreign exchange earnings of $15,000 in the previous financial year to be eligible for the SEIS scheme. Individual service providers or proprietorships, on the other hand, must pay $10,000.

Net Foreign Exchange = Gross earnings in foreign exchange – Total remittances, payments, or expenses of foreign exchange

Foreign Exchange That Isn't Eligible

The scheme only applies to foreign exchange earnings from notified services. Other sources of income, such as gifts, receipts, loan repayment, or debt/equity participation, are ineligible and will not count toward SEIS eligibility.

Conclusion:

MSMEs, as well as present and prospective exporters, can benefit from government assistance in the form of export benefit in India. To avoid future problems with the government, any company seeking a benefit under the Foreign Trade Policy must adopt a professional mindset or seek professional assistance in applying for the advantages.

Location: India

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