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CHAPTER III
EXPORT MEASURES
There are various measures adopted by the Government to improve
export trade of our country among the various measures important
measures are as follows:

Duty drawback

Advance licence – allow duty free import

Deemed export

Technology up gradation fund
 Interest subsidy
 Gout subsidy

Export for textiles item

Star export house

Marketing development assistance

Textile centre infrastructure (or) development scheme

Export promotion council

Incentive for ISO 9000 (Quality Management Certificate)
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DUTY DRAWBACK
Duty drawback is composed the customs duty and central excise
duty paid on all raw materials, components and consumable utilized in the
manufacture of the end products.
Duty drawback is allowed as per the customs act 1962, under which
customs authorities have issued the customs and central excise duty draw
back rules. The schedule to these rules specifies the broad categories of the
items on which drawback are allowed. If any item of exports has not been
included, the ministry of finance should be approached for its inclusion of
the item in the schedule.
The rule made by the Government of India and published in their
notification given, forms the basis of drawback of duties. Even thought
there have been amendments from time to time of these rules.
The
notification of 1995 is still the basis on which duties are computed and
paid.
The rates of draw back are divided into two categories
i.
The All – Industry Rates which are applicable to all exports of
such items. These all – industry rates are subject to revision
either on the initiative of the Government or of the export
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promotion councils.
The variation of duty incidences may
warrant a version of these all industry rates.
ii.
The other category is the brand rules which are fixed for a
particular manufacturer. Unlike the all industry rules brand are
applicable only to the manufacturer for whom these rates have
been fixed, for this fixation, the manufacturer is required to
submit date in the prescribed draw back performer – 1, 11 and
111.
After a verification of these statements and related
documents, the central
excise commission
rates
having
jurisdiction over the manufacturing unit will fix a rate / quantum
of draw back which will be applicable for all the exports made by
the manufacturer of the products for which the rate of drawback
is fixed.
No separate application is required for claiming the duty draw back. If
an exporter wished to claim drawback, it is compulsory that he should file a
drawback shipping bill. A triplicate copy of the shipping bill automatically
becomes, after shipment, an application for the claim for duty drawback. If
the products exported are given under the all industry rate category, the
serial and sub – serial number together with the amount, should be
indicated in the green shipping bill. If brand rates are applicable, the
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exporter should mention the notification number and data, and claim the
amount as per the rates / quantum indicated in the authorization. If the
product exported does not come under the all industry rates or brand rates,
the exporter can still safeguard his claim for draw back by indicating in the
shipping bill that the claim is made under the provisional claim for draw
back.
On receipt of the triplicate copy of the shopping bill from the
exporter, duly complete, together with a freighted / signed copy of bill of
lading, a photo copy each of the invoice, bank certificate and insurance
premium, receipt the drawback department verifies the particulars and
issues the cheque to the exporter’s bank, under intimation to the exporter,
giving the payment details.
Only to the manufactures for whom these rates have been fixed. For
this fixation, the manufactures is required to submit date in the prescribed
draw back proformas I, II, III.
No separate application is required for claiming the duty draw back.
If an exporter wishes to claim drawback, it is compulsory that they should
file a drawback shipping bill.
A triplicate copy of this shipping bill
automatically becomes after shipment, an application for the claim for duty
draw back. If the product exported does not come under the all industry
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rates or brand rates, the exporter can still safe grand his claim for draw
back by indicating in the shipping bill that the claim is made under the
provisional claim for draw back.
On receipt of the triplicate copy of the shipping bill from the
exporter, duty completed, together with a freighted / signed copy each of
the invoice, bank certificate and insurance premium receipt, the drawback
department verifies the particulars and is, sores the cheque to the exporters
bank under intimation to the exporter, giving the payment details.
ADVANCE LICENCE – ALLOW DUTY FREE IMPORT
Another important measures allowed by the Government to textile
exporter in India is duty, free import; export production requires use of
many inputs in small quantities as per land down standard input output
norms.
Even though such inputs are allowed for imports without payment of
customer’s duty under advance licensing scheme. Exporters generally do
not import such items because of talk of economics of scale and are forced
to source them locally at a higher price. The existing duty exemptions
schemes have been of little design limitations. To address the issue, the
salient features of the advance licensing such me and duty free
replenishment
certificate
which
allows
transferability
of
import
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entitlements have been clubbed to evolve a new such me named as duty
free import authorization such me. The new such me offer the facility to
import they require inputs before the exports. If allows transferability of
import authorization such me. The new such me offer the faculty do the
exports.
It allows transferability of scrip once the export obligations
complete. Such me will come into effect from its may 2006.
Such me allows duty free import of specified inputs for export
production as per standard input output norms.
The duty free import authorization will be issued with actual user
condition till export obligation is full – filled. Imports made under the
authorization will be exempt from payment of basis custom duty,
additional customer duty, educationist, anti – dumping duty and safe grand
duty if any.
A minimum 20% valve addition will be required for issuance of such
authorization except for items in germs and jewellery sector and item for
which specified value addition is prescribed.
DEEMED EXPORT
Deemed exports refer to those transactions in which the good
supplied do not leave the country and the payment for such supplies is
received either in Indian rupees or in free foreign exchange.
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a. Categories of supply
The following categories of supply of goods by the main/sub –
contractors shall be regarded as “Deemed exports” under this policy,
provided the goods are manufactured in India.
i.
Supply of goods against advance licence / advance licence for
annual requirement / DFRC under the duty exemption / remission
schemes.
ii.
Supply of goods to export oriented units (EDUS) or units 10 –
cated Special Economic Zone (SEZs) or Software Technology
Parks (STPs) or Electronic Hardware Technology Parks (EHTPs).
iii.
Supply of capitals goods to holders of licences under the Export
Promotion Capital Goods (EPCG) scheme.
iv.
Supply of goods to projects by multilateral or bilateral agencies /
funds as notified by the department of economic affairs, ministry
of finance under international competitive bidding in accordance
with the procedures of those agencies / funds, where the legal
agreements provide for tender evaluation without including the
customs duty.
v.
Supply of capital goods, including in unassembled / disassembled
condition as well as plants, machinery, accessories, tools, dies
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and such goods which are used for installation purpose till the
stage of commercial production, and spares to the extent of 10%
of the for value to fertilizer plants.
vi.
Supply of goods to any project or purpose in respect of which the
missing of finance by a notification permits the import of such
goods at zero customs duty coupled with the extension of benefits
under this chapter to domestic supplies.
vii.
Supply of goods to the power projects and refineries not cover in
(vi) above.
viii. Supply of marine freight containers by 100% EOU (Domestic
Freight Containers – Manufactures) provided the said containers
are exported out of India within 6 months or such father period.
ix.
Supply to projects funded by UN agencies.
x.
Supply of goods to nuclear power projects through competitive
bidding as opposed to international competitive bidding.
The benefits of deemed exports shall be available under paragraph (iv),
(v), (vi) and (vii) only if the supply is made under the procedure of
International Competitive Bidding (ICB).
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b. Benefits for deemed exports
Deemed export shall be eligible for any/all of the following benefits
in respect of manufacture and supply of goods qualifying as deemed export
subject to the terms and conditions as given in hand book (vol. 1).
i.
Advance licence for intermediate supply / deemed export /
DFRC.
ii.
Deemed exports drawback.
iii.
Refund of terminal excise duty.
Export incentives for textiles item
Exim bank offers a special credit facility to Indian exporters of
consultancy and technology services, so that they can, in turn, extended
term credit to overseas importers.
The services converted include
providing personal for rendering technical services, transfer of technology /
know – how, preparation of project feasibility reports, maintenance and
management contracts, etc.
Guarantee facilities
Indian companies can avail of these of furnish requisite guarantees to
facilitate execution of export contracts and import transactions.
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Forfeiting
Forfeiting is a financing mechanism that enables a company to
convert credit sale to cash sale, on without recourse basis. Exim bank acts
as a facilitator for the India exporter, enabling him to access the services of
an overseas forfeiting agency.
For commercial banks
Exim bank offer rediscounting facility to commercial banks.
Enabling them to rediscount export bills of these SSI customers, which
instance not exceeding 90 days?
WE also after refinance of supplier’s credit, enabling commercial
banks to after credit of Indian exporters of eligible goods. Who is turn
extending term credit over 180 days to importers overseas.
Other facilities for Indian companies
Indian companies executing contracts within India, but which are
financed by multilateral funding agencies, car avail of credit under our
finance for deemed exports facility, aimed at helping them meet cash flow
deficits.
For overseas entities
Overseas buyers cab avail of buyer’s credit form Exim bank, for
import of eligible goods from India on deferred payment terms. Besides,
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Exim bank extends lines of credit co overseas financial institutions.
Foreign governments and their agencies, enabling them to lend loans to
finance import of eligible goods from India.
Finance for Export Oriented Units (EOUS)
For the purpose of our financing, an export oriented company is
defined as any company with a minimum export orientation of 10% of net
sales, or annual export sales of Rs. 5 crores, whichever in lower.
Project finance
For setting up EOUs
Exim banks offers term loans for setting up new projects and for
acquisition of assets for modernization / up gradation / expansion of
existing units. The bank also extends 100% refiance to commercial bank,
for term loans sanctioned by the leading bank to an EOU.
For textile and jute industries
The bank also extends finance to eligible units in textile industries
under the technology upgradation fund scheme to enable them upgrade
their manufacturing facilities.
For software industry
The bank offers a comprehensive financing / services package for the
software industry. These include project / equipment finance, working
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capital finance, overseas investment finance, besides support for obtaining
product / process certification, export marketing and export product
development.
To address the perceived constraints in the availability of trained
software professions, Exim bank extends term loans to software exporters
for establishment / expansion of software training institutes. Further, the
bank also facilitative setting up of Software Technology Parts (STPs).
Impact of incentives on pricing
In the sixties and seventies there were many hurdles for the export of
Indians products. Taking them into consideration, government evolved a
system of incentives to exporters to enable them to be competitive in the
world market.
Hence, it was essential to take the benefit of these
incentives in arriving at an export price.
But after the reforms brought about by the government in 1991, it
has with dream most of these incentive. There are hardly a few left, such
as :
a.
Advance license to import raw materials and components without
duty.
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b.
Duty draw back under this scheme the exporter gets a refund of
duties import duty on raw materials and components, and excise
duty on locally bought out components.
As stated earlier, the effect of these concessions will not be much,
exports; there is always a sudden need for visits abroad, or test marketing
products in new markets or developing new products needed for the
market, all of which can wipe away any benefits one gets through
incentives.
We are at a stage when the export price is almost the same as
domestic price, and it is better to base export pricing on this in the future,
since it is government policy to eliminate all incentives.
1. Star export houses
Merchant as well as manufacturer exporters, service providers,
Export Oriented Units (EOUs) and units located in Special Economic
Zones (SEZs), Agri Export Zone (AEZs), Electronical Hardware
Technology Parks (EHTPs), Software Technology Parks (STPs) and Bio
Technology Parks (BTPs) shall be eligible for applying for status as star
export house.
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2. Status category
The applicant shall be categorized depending on his total FOB (FOR
– For Deemed Exports) export performance during the current plus the
previous three years.
Category
Performance (Rupees in Crores)
One Star Export House
15
Two Star Export House
100
Three Star Export House
500
Four Star Export House
1500
Five Star Export House
5000
Privileges
A star export house shall be eligible for the following facilities.
i.
Authorization / license / certificate / permissions and customs
clearances for both imports and export on self – declaration basis.
ii.
Fixation of input – output norms on priority within 60 days.
iii.
Exemption from compulsory negotiation of documents through
banks. The remittance however would continue to be received
through banking channels.
iv.
100% retention of foreign exchange in EEFC account.
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v.
Enhancement in normal repatriation period from 180 days to 360
days.
vi.
Declared.
vii.
Exemption from furnishing of bank guarantee in schemes under
this policy.
viii. Two star export houses and above shall be permitted to establish
export where houses, as per guidelines issue by department of
revenue in this regard.
3. Validity period
All status certificates issued or renewed on or after 1.9.2004 shall be
valid from 1st April of the licensing year during which the application for
the grant of such recognition is made upto 31st March, 2009, unless
otherwise specified.
On the expires of status certifies, application for grant of status shall
be required to be made within a period as prescribed in the handbook of
procedures, as a fresh application for continued recognition. During the
intervening period, the star export house shall be eligible to claim the usual
privileges under para 3.5.2.1 above, subject to furnishing of an undertaking
by the applicant at the time of claiming such facilities and benefits that they
are eligible for continued recognition as per current policy.
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Marketing Development Assistance (MDA)
The Marketing Development Assistance (MDA) scheme is intended
to provide financial assistance for a range of export promotion activities
implemented by export promotion councils, industry and trade associations
on a regular basis every year.
As per the revised MDA guidelines, assistance under MDA is
available for exporters with annual export turnover upto Rs. 10 crores.
These include participation in trade pairs and buyer seller meets
abroad or in India, exports promotion seminars etc.
Further, assistance for participation in trade fairs abroad and travel
grant is available to such exporters if they travel to countries in one of the
four focus areas, such as, Latin America, Africa, Cis region, Asian
countries, Australia and New Zealand.
For participation in trade fairs etc., in other areas financial assistance
without travel grant is available. Textile centre infrastructure development
scheme.
The State Government shall be encouraged to participate in
promoting exports from their respective states.
For this purpose,
department of commerce has formulated a schemes called ASIDE.
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Suitable provision has been made in the annual plan of the
department of commerce for allocation of funds to the states on the twin
criteria of gross exports and the rate of growth of exports.
The states shall utilize this amount for developing infrastructure such
as roads connecting production centers with the ports, setting up of Inland
container depots and container freight stations, creation of new state level
export promotion industrial parks / zones, augmenting common facilities in
the existing zones, equities participation in infrastructure projects,
development of minor parts and jetties, assistance in setting up of common
effluent treatment facilities, stabilizing power supply and any other activity
as may be notified by department of commerce form time to time.
Export promotion councils
These are non-profit organizations dedicated to the exports of a
particular group or products, projects and services. These are
1.
Apparel export promotion council, New Delhi.
2.
Basic chemicals, pharmaceuticals and cosmetic export promotion
council, Mumbai.
3.
Cashew export promotion council, Cochin.
4.
Carpet export promotion council, New Delhi.
5.
Chemicals and allied products export promotion council, Kolkata.
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6.
The cotton textiles export promotion council, Mumbai.
7.
Electronics and computer software export promotion council,
New Delhi.
8.
Engineering export promotion council, Kolkata.
9.
The gem and jewellery export promotion council, Mumbai.
10.
Export promotion council for handicrafts, New Delhi.
11.
The handloom export promotion council, Chennai.
12.
The Indian silk export promotion council, Mumbai.
13.
Council for leather exports, Chennai.
14.
Overseas construction council of India, Mumbai.
15.
The plastic and linoleum export promotion council, Mumbai.
16.
Shellac export promotion council, New Delhi.
17.
The sports goods export promotion council, New Delhi.
18.
The synthetic and Rayon Textile export promotion council,
Mumbai.
19.
Wool and woolens export promotion council, New Delhi.
20.
The powerloom development and export promotion council,
Mumbai.
21.
Export Promotion Council (EPC) for EOUs/SEZ units, New
Delhi.
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The councils look after the interest of the exporters of the product
group entrusted to them.
They hold periodical meetings of the
representatives of the trade to discuss their problems and present them to
the Government to find solutions.
They are in touch with our embassies and various trade sources and
gather information regularly regarding export opportunities and circulate
them to the members.
They help to conduct exhibitions and fairs and also arrange to send
delegations abroad to promote exports.