An Ultimate Guide to Export Incentives for Indian Traders

The export of products and goods is the primary earning source of foreign exchange in India. It is also one of the key components of generating domestic revenue. India includes innumerable sellers and exporters, exporting their products internationally in a thriving eCommerce market. The country is also planning to increase its GDP from $3.3 to $5 trillion by 2025, with the export goal racing to $1 trillion.

To encourage more sellers and business owners to export their finished products from India, the Government of India is offering numerous export incentives that will benefit their organization. These benefits will motivate the exporters to contribute to the expanding export trade of India with pride.

Export incentives in India are defined as economic assistance provided by the Government to exporters. Advantages include low-cost loans, government-financed advertisements and subsidies, tax exemptions, and more.

Moreover, these incentives help business owners decrease their overall cost of exporting. It also sets a competitive price for its products in the global market. All Government export incentives should comply with the WTO (World Trade Organization). WTO restricts the check on ethical and legal trade practices worldwide.

Below are some of the top export incentives in India that help the exporters and MSMEs avail different benefits.

SEIS encourages sellers to export notified services. In this export scheme, the Government offers a 3% to 7% incentive on the total foreign exchange earnings. The criteria to avail of this scheme are having an IEC (Import Export Code) and a minimum total foreign exchange earnings worth USD 15,000 or INR 11,00,000.

Under the EPCG scheme, exporters can export capital goods like leather used in manufacturing, pre-production, post-production, and production of leather bags at zero customs duty. As a result of this scheme, service exporters can decrease their capital costs.

The Advance Authorization Scheme offers duty-free raw material import. The business owners manufacture and produce these materials into finished products for export. The provision covers packaging materials, fuel, and other wastages during final product creation.

It allows exporters to import raw materials without a duty fee. However, it is only applicable if they use those raw materials to manufacture finished export products.

The Government of India introduced this scheme in 1980. It is to encourage exports, create extra production capacity, generate employment, and earn more money through foreign exchange. The scheme offers a few concessions and waivers in taxes and compliance to exporters. Exporters who want to export all of their produced goods can avail themselves of the EOU scheme.

DFIA allows 0% duty-free import of raw materials like fuel, inputs, energy resources, oils, and catalysts used or consumed in the production of export products. Under this scheme, the exporter can exempt the payment for the import only from the BCD (Basic Customs Duty).

This scheme includes two parts: pre- and post-export DEPB, effective April 1, 2000. Exporters can choose this scheme after exporting the finished products at a predetermined credit of Free of Board (FOB) value.

The rates for the DEPB scheme are dependent on either the lower value cap or FOB value. Exporters can avail of this scheme on all import goods except for restricted items like gold pens, nibs, and watches.

It offers financial assistance to exporters in their promotional activities to trade promotion organizations, research institutions, export promotion organizations, national-level institutions, laboratories, exporters, and many more.

RoDTEP replaced the old Merchandise Exports from India Scheme (MEIS) in a phased way in December 2020. It is one of the best export promotions and incentives by the government of India, offering a refund on all hidden charges and other taxes. 

You will never get these refunds with any other government incentive scheme. This export incentive applies to state and central taxes on transportation fuel for export products, electricity duty for product manufacturing, stamp duties on export-import legal paperwork, toll tax, and more. So, if you are wondering how to get export incentives, you can claim your dues from any one of the above accordingly.

RoSCTL is a new export incentive scheme introduced in 2019. It is applicable to all textiles and readymade apparel such as clothing, bedsheets, rugs, garments, carpets, and more. It refunds some of the taxes like VAT on captive power, transportation fuel, electricity duty, and mandi tax.

The NIRVIK scheme, introduced by the Export Credit Guarantee Corporation of India (ECGCI), offers high insurance coverage, a simple claim procedure, and a lower premium for small exporters and others. The incentive offers up to 90% principal and interest cover against the recent credit guarantee of up to 60% loss.

GST Act offers the following incentives to the Indian exporters.

1. LUT Bond helps to export goods with no GST payment by claiming a LUT (Letter of Undertaking).
2. A 1% GST refund for merchant exporters helps them export goods directly from local suppliers with a .1% concessional rate.
3. IGST refunds help exporters pay integrated GST on their export goods. They can claim a refund from the customs department.

The Indian Government introduced the PLI scheme on 20 November 2020. It is for highly potential sectors, including battery cell, telecom networking, auto, pharma, and food and textiles. This scheme will offer benefits worth INR 1.46 lakh crore (approximately USD 19.72 billion) over five years. This incentive will re-establish the Government’s goal of “Make in India” and will clear the loan standing bias for MSMEs.

IES offers post- and pre-shipment credit for exports to business owners. The Reserve Bank of India and the respective banks implement and govern this scheme. It provides 3% financial support to the exporters of the 416 tariff lines and 5% interest to the MSME sector manufacturers.

You can claim export incentives through DGFT. They execute all the benefits under the Commerce and Industrial Ministry in India. Exporters can claim policies related to various levying and collection of customs duty, different export penalties, GSTs, and fees through CBIC (Central Board of Indirect Taxes and Customs). 

Furthermore, the Reserve Bank of India handles all the financial DGFT export incentives. Additionally, DGEP (Directorate General of Export Promotion) takes care of all issues related to export refunds, policies for the export promotion scheme, and suggestions for revisions or changes to custom-related policies and processes.

Numerous incentives are given to exporters in India to encourage the concept of exports. Most of the above export incentives ensure that the exporter receives all the penalties, subsidies, and any other benefits as quickly as possible. So, it is time to grab these opportunities by starting your own export business through some registrations.