EXPORT PROMOTION

SCHEME IN INDIA

Government of India like almost all other has been endeavouring to develop exports. Export development is important to the firm and to the economy as whole.

The benefits of exports to the economy are

When the domestic market is small, foreign market provides opportunities to achieve economies of scale and growth.

Supply of many commodities as in the case of a number of agricultural products in India, is more than the foreign demand.

Export enable certain countries to achieve export lead growth.

Export markets may help mitigate the effects of domestic recession.

A country may need to boost its exports to earn enough foreign exchange to finance its imports and service its foreign debt.

Even in the case of countries with trade surplus, export promotion may be required to maintain its position against the international competition and level of domestic economic activity.

Objectives of the export promotion measures in India are :

Compensate the exporters for the high domestic cost of production.

Provide necessary assistance to the new and infant exporters to develop the

export business.

Increase the relative profitability of the export business.

ORGANISATIONAL SET UP

Government has established or sponsored a number of organisations to provide

different types of assistance to the exporters. Apart from the organisations

established exclusively for export promotion there are also a number of other

institution which assist the export sector. Important organisations which help to

promote exports are

Ministry of commerce

The ministry of commerce, government of India, is the most important organ concerned

with the promotion and regulation of the foreign trade of the country. The ministry has

elaborate organisational arrangement to look after various aspects of trade regulation and

promotion. It plays as very important role in different matters concerned with foreign

trade of the country including commercial relation with other countries, promotion and

regulation of foreign trade, state trading etc.

Autonomous bodies

Export Inspection Council: The Export Inspection Council, a statutory body, is

responsible for the enforcement of quality control and compulsory preshipment

inspection of various exportable commodities.

Indian Institute of Foreign Trade: It is registered under the Societies Regulation Act, is

engaged in activities like training of personnel in modern techniques of international

trade, area surveys, commodity surveys, organisation of marketing research and

market surveys.

Indian Institute of Packaging : the main aim of institute are to undertake research on raw materials for the packaging industry, to organise training programmes on packaging technology, to stimulate consciousness of the need for good packaging etc.

Export Promotion Councils, Commodity Boards and Authorities: These councils are registered as non profit organisation under the Companies Act. The councils perform both advisory and executive functions. These councils are also the registering authorities under the Import Policy for registered exporters.

Federation of Indian Export Organisations: It functions as a primary servicing agency to provide integrated assistance to government recognised export houses and as a central coordinating agency in respect of export promotion efforts in field of consultancy services in the country,

Indian Council of Arbitration: It promotes arbitration as a means of settling commercial disputes and popularises arbitration among the traders, particularly those engaged in international trade.

India Trade Promotion Organisation: The ITPO was bought into being in 1992 by merging together the erstwhile Trade Fair Authority of India(TFAI) and the erstwhile Trade Development Authority of India (TDA).

Public Sector Undertakings

Some of the functions are

The state Trading Corporations of India and its subsidiaries

The spices Trading Corporation

The export Credit Guarantee Corporation

ADVISORY BODY

Central Advisory Council on Trade: It consists of representatives from different

organisation and individuals with business standing and expertise in the field of trade and

commerce. The commerce is the chairman of this council

INCENTIVES

Export incentives are a widely employed strategy of export promotion. The main aim of

these incentives is to increase the profitability of export business. Important export

incentives in India include rebate of duties, cash compensatory support, interest rates,

freight subsidy etc. The Abid Hussian Committee has observed, they are more a

compensation for the comparative disadvantage faced by the Indian exporter than

incentives.

Duty Exemption/Drawback

The scheme of duty exemption is designed to avoid the incidence of commodity taxes like excise

duty and customs duties on exports so as to make the exports more price competitive. Duty

exemption as an export promotion measure had its origin in India during the Second Plan. Custom

duties and excise duties on inputs raise the cost of production in export industries and thereby

affect the competitiveness of exports. Therefore exports need to be compensated for the

escalation in their costs attributable to such customs and excise duties. There are 2 main

drawbacks rates

All industry rate applicable to a group of brands

Brand rate applicable to individual products not covered by the industry rate.

Awards

A number of awards have been given instituted to encourage exports and to recognise excellence in

exports. There are separate awards for different categories of exporters. Awards are given on the

basis of development of market for products which have not been exported previously, successful

introduction of new products, successful break through in foreign markets where conditions have

been especially difficult etc.

Other Incentives

Some important incentives were terminated consequent to certain measures taken as a part of the economic liberalisation.

Cash Compensatory Support(CES) was a cash subsidy scheme designed to compensate the exporters for unrebated direct taxes and to provide resources for product/market development.

Import Replenishment(REP) licenses, which were related to the f.o.b value of exports.

International Price Reimbursement Scheme was designed to make available specified inputs to exporters at international prices.

Production Assistance/ Facilities

Export depend on exportable surplus and the quality and price of the goods. Government have therefore taken a number of measures to enlarge and strengthen the production base, to improve the productive efficiency and quality of products and to make the products more cost effective.

Marketing Assistance

A number of steps have been taken to assist the exporters in their marketing efforts. Some of the schemes and facilities which assist export marketing are

Market Access Initiative: In 2001, Government had also announced the launching of the

Market Access Initiative scheme for undertaking marketing promotion efforts abroad on

country-product focus approach basis.

Trade Fairs and Exhibitions : It is an effective media of promoting products, facilities

are provided for enabling and encouraging participating of Indian

exporters/manufactures in such events. Example the MPEDA organises seafood trade

fair in India, in every 2nd year, which attracts a number of foreign buyers and others

connected with the seafood industry.

Finance : the Export-Import bank and commercial banks and other financial institutions

banks provide pre shipment and postshipment finance to exports.

Quality Control and Preshipment Inspection : number of steps have been taken by the

Government to improve the quality of exports and to ensure that only goods of

appropriate quality are exported from the country.

India Brand Equity Fund: Government of India initiated steps to establish it with the

objective of promoting the made in India image abroad.

EPZ’S EOUs TPs & SEZs

Export Processing Zone(EPZ): They are industrial estates which

form enclaves from the national customs territory of a country and

are usually situated near seaports or airports. EPZ units can import

capital goods, raw materials etc for export production without

payment of duty. The objectives of EPZ are

To earn foreign exchange.

To generate employment opportunities.

To contribute to the overall development of the economy.

Export Oriented Unit (EOU) : It refers to an industrial unit which

offers for exports its entire production, excluding permitted level of

rejects. EOUs were not normally encouraged in respect of products

subject to export control quota ceilings which can be reached by

existing units in the industry. EOUs enjoyed most other facilities and

incentives as were incentives as were available to the EPZ units.

SEZ’s

While announcing the Exim policy for 2000-01 the commerce

minister stated that India would develop Special Economic

Zones to boost the country’s exports. The only laws which

will operate in these zones will be the labour and banking

laws. It was announced that all the existing EPZs will be

converted into SEZ’s. One of the most important reason for

the success of the Chinese SEZ’s is the absence of trade

union. A democratic country like India cannot think of

denying the labour rights. Yet, the big push of development

envisaged by the SEZ’s should be expected to have a very

significant impact.