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NAMES SHUBHANGI ADENKAR ASHA AHUJA SHEEMAN AHMED BIJNESH RANA LAVINA UDASSI KHUSHBOO CHATRATH

ROLL NO. 05 06 07 44 54 60

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ACKNOWLEDGEMENT
We are very much glad to Prof. MINAL GANDHI for giving us such a knowledgeable project. It was an immense pleasure to work on this project. In this project we got to know about the EXPORT ASSISTANCE & INCENTIVES. We are also hoping for such good and knowledgeable projects in future also. Thanking you

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INDEX CONTENT MEANING & INTRODUCTION IMPORTANCE OF EXPORT ASSISTANCE ADVANTAGES/ ROLE OF EXPORT ASSISTANCE & INCENTIVES IN EXPORT PROMOTION BLANKET PERMITS DUTY ENTITLEMENT PASSBOOK (DEPB) SPECIAL IMPORT LICENCES TAX INCENTIVES && RELIEFS CLAIMING EXPORT INCENTIVES EXPORT PROMOTION OF CAPITAL GOODS CONCLUSION BIBLIOGRAPHY PAGE NO. 04 05-06 07 08-09 10 11 12 13-17 18 20 21

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MEANING OF EXPORT ASSISTANCE AND INCENTIVES

Export assistance and incentives is a financial help given by the Government to Indian exporters to improve their ability to compete in foreign markets. Indian exporters can survive provided they can produce good quality at reasonable cost. In the domestic market particularly is highly taxed. We can export our goods but cannot taxes. The exporters need various concessions and rebates to make the price competitive.

INTRODUCTION
The Export-Import policy 1992-97 brought about many fundamental changes in Indias external trade policy. It gradually laid the foundation of globalization of Indian economy by initiating liberalization and making Indian industries to face competition from foreign MNCs. Until 1992, Indian markets were highly protected and the Indian government used to give many incentives to the Indian exporters. But many of these incentives were withdrawn by the 1992-97 and subsequent policies.

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IMPORTANCE OF EXPORT ASSISTANCE

Export promotion was accorded a very low priority during the initial pregame of economic development in India. During the 1950s and almost up to mid 1960 export-promotion was not at all considered as an essential element in Indias economic development process. Easy and adequate availability of external assistance from World Bank and other international agencies as well as developed countries has provided India with more than Adequate amount of foreign exchange for financing development as well as essential imports. Hence, the urgency of earning foreign exchange through expanding exports was not there. In addition, because of the large size of the domestic market in India, import substitution rather than the export promotion was considered as a more useful strategy for Indias economic Development process. Similarly during the period of the First Three Five year plans over 1950-51 to 1965--66" Indian economy was in a formative stage. Consequently Indias capacity to export manufactures or industrial products was extremely limited. Hence, on this account as well, India could not look at international markets especially because of her extremely limited capacity to offer supplies of- industrial products. However after 1965-66, the aid flows to India were substantially reduced. Consequently, for the first time India was made to depend significantly on her exports for acquiring foreign exchange to meet her needs of essential imports. Moreover, by the second-half of 1960s, a number of industries especially in the engineering, chemicals, leather, marine and other sectors have reached a stage from where they were looking for an opening in international market. Government of India had therefore, considered it as appropriate to lay emphasis on the need for export promotion so as to enable the country to meet the need of imports. Fortunately, it received an encouraging response from the industrial sector which was also looking for international markets. Over the last couple of decades export promotion has assumed critical importance in Indian economy. Export growth has become the main determinant of economic growth in India. The process of globalization and liberalization has further enhanced the need of strengthening the support of export-import trade business of the country. Moreover, with the increasing burden of debtservicing on the one hand and the situation of aid fatigue on the other,
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exports have now emerged as the only viable source of meeting the foreign exchange needs of Indian economy. Hence, the feasibility of financing almost entirely depends upon the growth in Indian export. It may, therefore, be, stated that the future economic growth in India is inseparably linked with growth in Indian exports. Hence, export, promotion is being an overriding consideration in policy formulation. Export promotion policy in India has three main segments. They are as follows: a) Policies for increasing Investment and production in export sector. b) Price-support measures for rendering exports more competitive. c) Measures for strengthening marketing effort by the export sector.

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ADVANTAGES/ ROLE OF EXPORT ASSISTANCE & INCENTIVES IN EXPORT PROMOTION

Over the years assistance & incentives provided by our Government has helped Indian exporters in many ways. It has resulted in earning high foreign exchange & opening up new areas of business. Some of the common advantages are: 1. Export assistance & incentives make the business financially attractive. 2. It helps to increase the profit in the business. 3. It enables exporters to expand & diversify the business. 4. It makes available expertise in the field of export marketing. 5. It improves the competitive ability of the exporters. 6. It facilitates repayment of loans including debt- servicing. 7. It removes the deficit in the balance of payment. 8. It makes optimum utilization of the available resources between domestic & overseas markets. 9. It compensates for higher domestic cost of production. 10. It provided much needed help to the new exporters. 11. It helps to achieve socio-economic objectives of the country. 12. It helps to earn the goodwill for the country. 13. It creates new employment opportunities. 14. It helps to reduce trade deficit.

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BLANKET PERMITS
Blanket permits is a facility given to large scale exporters only such as export houses, trading houses, star trading houses, & super star trading houses. Blanket permits are issued by RBI for a lump sum amount subject to its having fulfilled certain export obligations.

Purposes for which Blanket Permits are used: 1. Advertising campaign abroad. 2. Export promotion tours abroad. 3. Purchase of samples abroad. 4. Expenses of quality testing abroad. 5. Participation in the international trade fairs & exhibition. 6. Market studies abroad. 7. Opening branch overseas. 8. Setting up after sale service network abroad. 9. Replacement of defective or wrong supplies. 10. Publication in foreign journals. 11. Expenses related to execution of contracts. 12. Payment of consultancy & legal fees abroad. 13. Payment for patents & trade marks to be registered abroad. 14. Filing tenders abroad and payment of earnest money. 15. Any other expenses approved by RBI.

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DUTY ENTITLEMENT PASSBOOK (DEPB)

DEPB was introduced in the EXIM Policy 1997-2002. Under the Duty Entitlement Passbook (DEPB) Scheme, an exporter is eligible to claim as a specified percentage of FOB value of exports. The credit shall be available against such export products & at such rate as may be specified by the DGFT. Validity: DEPB shall be valid for 12 months from the date of its issue. Eligibility: Merchant-exporter eligible for DEPB. Types: DEPB is of two types viz., (a) Pre-export basis & (b) Post-export basis (a) PRE-EXPORT BASIS: DEPB on pre-export basis aims to provide the facility to eligible exports o import inputs which required for production. POST-EXPORT BASIS: DEPB on post-export basis shall be granted against exports already made. & manufacturer-exporter are

(b)

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SPECIAL IMPORT LICENCES

One of the special incentives given to Indian exporters includes Special Import Licences (SIL). SIL is freely transferable. SIL is available for the following categories of exporters: 1. 2. 3. 4. 5. EH/TH/STH/SSTH. Deemed Exports. Export to ACU countries. Manufacturers with ISO 9000 or BIS 14000. SSI Exporters.

SSI holders can import certain items which cannot be imported by other exporters. Under EXIM Policy 1997-2002,150 items have been shifted from restricted list to SIL list.

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TAX INCENTIVES & RELIEFS

Income-Tax Relief to Exporters: 1. Deductions of whole of the profits derived from export of specified goods or merchandise of exporters or Export Houses or Trading Houses. 2. Deductions of specified amount of profits of companies engaged in the business of hotel or of a tour operator or a travel agent. 3. Tax relief on remuneration received from abroad by teachers. 4. Tax relief to playwrights, artists, sportsmen. 5. Tax relief on export of computer software. 6. Tax relief to an Indian company or resident tax payer by giving a deduction of 50% of the profit from the project exports in computing the taxable income. 7. Tax exemption on plantation subsidy. 8. Five-year tax holiday of 100% export oriented units. 9. Five-year tax holiday to units in free trade zones or export processing zones. 10. Relief from tax on dividends of shares and the royalties from certain foreign enterprises.

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CLAIMING EXPORT INCENTIVES

(1)Duty Drawback: Under duty drawback scheme the exporter is eligible to get refund of custom duty & excise duty paid on materials, components & consumable utilized in the manufacture of finished goods. Rates of Drawback: There are two different rates of drawback viz. (a) Brand Rates & (b) All Industry Rates (a) BRAND RATES: These are fixed manufactures-wise on the basis of data furnished by the manufacturers. (b) ALL INDUSTRY RATES: All-Industry Rates is applicable to all exports alike as notified by the Government of India. These rates are published once in a year. The drawback rates are determined in either specified terms or in terms of percentage of net F.O.B. value of the goods.

Application for Brand Rates: An exporter willing to take advantage of brand rates must apply within one month from the date of export. Regular exporters can apply once in a year (preferably in June) to fix up brand rates. The data submitted by exporter is verified by the Custom Officer/Central Excise Officers and the report is forwarded to: The Director (DBK) Ministry of Finance, New Delhi. The Director will sanction the Brand Rate.

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PROCEDURE TO CLAIM DBK

1) Application: The exporter has to submit his application to the nearest Customs House. The data is verified by the Custom Officers. 2) Time to Apply: After the Customs Officer has given let ship order the expor ter should apply within 60 days. 3) I. II. III. IV. V. Necessary Documents: A copy of commercial invoice duly certified by the bank. A copy of bill of lading (non-negotiable). A copy of shipping bill (Drawback Copy). A copy of brand latter, if applicable. Any other document.

4) Refund of Drawback: The filling of the Green Shipping Bill itself is an application for the agent of drawback duty. If the documents are in order, cheques are issued to the exporter. Since February 1986, the Government of India has introduced a new simplified procedure of disbursement. DBK claim is passed within 24 hours of presentation of papers. Within the next 15 days the amount is transferred to the exporters bank account.

(2)EXCISE DUTY: Goods manufactured in India & meant for exports to other countries are exempted from the Central Excise Duty. There are two different methods of providing exemption viz., 1. Excise Rebate & 2. Export under Bond.

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1. Excise Rebate: Under this method, the exporter pays the amount of Excise Duty to the Authorities. After Shipment of goods, the exporter claims refund of the same. 2. Export under bond: Duty is not paid but an indemnity bond is executed in favour of excise authorities. Finished goods when exported out of India are eligible for excise duty exemption under bond. Export to Nepal & sales to duty free shops are also exempted from excise duty exemption under bond.

(3)Sales Tax Exemption: State Governments have exempted exportable goods for payment of sales tax. However, exemption is not granted unless the exporter or his firm is registered with sales tax authorities. Registration Procedure: 1. Application to STO: An application in prescribed form should be submitted to the sales tax (STO) in whose jurisdiction the exporters office is situated. On receipt application, STO deputes an inspector to visit the office of the exporter. 2. Inspection of Documents: The inspector inspects relevant books & documents such as (a) Sales and purchase Registers. (b) Memorandum and Articles of Association, Certificate of Incorporation, Partnership Deed, etc. (c) Any other relevant document. 3. Report of Inspector: The inspector submits his report to STO. On verification of the report, the STO may grant sales tax registration number to the exporter. If need be, the exporter may be called at STO for clarifications.
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4. Submission of Security Bond: The exporter has to submit security bond from another firm already having a sales tax registration number. Only then he gets a registration number for his own firm. 5. Granting of Sales Tax No.: When the formalities mentioned above are completed, STO grants Sales Tax Registration Number to the exporter. Exemption Procedure: 1. Obtaining Form H: A registered exporter has to apply to the concerned STO of his area to obtain Form H. For this, he has to submit certified copies of the following documents along with his application. i. Confirmed export order. ii. Letter of Credit. iii. Purchase invoice, if goods are purchased for export purpose. iv. Shipping bill duly certified by the Customs. The exporter has to affix necessary fee stamp on each of the Form H issued. Here after, STO affixes the exporters company stamp on the Form H. 2. Processing of Form H: After shipment of the goods, the exporter has to fill in the relevant details in Form H, which is prepared in triplicate. The exporter retains one copy for him & the other two copies are given to the seller/manufacturer from whom he purchased the goods for export purpose. The seller/manufacture sends one copy of the Form H to the STO along with his Return of Sales Tax. The other copy is retained by him. STO may issue refund of sales tax amount, if already paid.

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(4)Octroi Refund: When the exporter brings manufacture goods inside the municipal limits of the city, he is required to pay Octroi duty to the Municipal Corporation. He can claim refund of Octroi duty, when he shows the proof of export to the relevant Municipal Authorities.

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EXPORT PROMOTION OF CAPITAL GOODS

This scheme functions with commitment on the part of exporters. Imports of capital goods are allowed and the rate of import duty has been reduced from 15% to 10%. Those exporters wish to take the advantage of this scheme must export four times the CIF value of imports. With view to achieve this target, the exporter is given time of five years.

EXPORT OBLILGATION

CUSTOMS DUTY

FOB BASIS
4 times CIF value of CG 6 times CIF value of CG

NFE BASIS
Not applicable 5 times CIF value of CG

PERIOD

10%

5 years

Zero duty (in case of CIF value is Rs. 20 crores or more) Zero duty in case CIF value is Rs. 1 crore or more for electronic, food processing, gems & jewellery, agriculture, animal husbandry, floriculture, horticulture,, pisciculture, viticulture, poultry & sericulture. Zero duty in case CIF value is Rs. 10 lakhs or more for software sector.

8 years

6 times CIF value of CG

5 times CIF value of CG

6 years

6 times CIF value of CG

5 times CIF value of CG

6 years

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Import of Capital Goods

Under this scheme, exporters are allowed to import both new and second hand capital goods with residual life of ten years. The import of second hand capital goods under the scheme is subject to certain conditions. Capital goods means: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) Plant Machinery Equipment Packing machinery and equipment Quality and pollution control Testing instruments Power generation sets Machine tools Refrigeration equipment Research and development etc.

Eligibility: EPCG scheme is available both for manufacturing and service sectors. In manufacturing sector, manufacturer exporters are eligible to import capital goods. In the service sector, the following are eligible: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) Consultants Travel agents and tour operators Architects Artists Chartered accountants Diagnostic centers Engineers Doctors Scientists etc.

Features of EPCG scheme: (1) (2) The EPCG licence holder can buy capital goods from domestic manufacturers. Such domestic manufacturers are permitted to import components at concessional customs duty of 10%. Whatever capital goods are imported, it is subject to actual user conditions.

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(3)

(4) (5) (6) (7)

(8)

In order to know about the progress of business, the EPCG licence holder has to submit a report of his export every six months. This report must be certified by a Chartered Accountant who is not a business associate of the exporter. In order to continue to get the benefit of EPCG scheme, the licence holder must fulfill the export obligations. When export obligation is fulfilled, the EPCG licence holder must submit a consolidated statement of exports. The EPCG licence holder will submit a certificate from his banker when payment is received from abroad. EPCG is a facility given to the exporters to improve their business. If they fail to fulfill the export obligation within the stipulated period, the government reserves the right to initiate action against the exporters. In order to get registered for EPCG facility, the exporter has to apply to Director General of Foreign Trade (DGFT) with application fee and relevant documents.

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DEEMED EXPORTS
Deemed exports refer to those transactions in which the goods supplied to not leave the country. The payment for such goods are made in India by the recipient of the goods. In all cases of deemed exports, supplies are required to be made directly to the designated projects/agencies/EPCG licence holders. Categories of Supply: Under the Exim Policy 1997-2002, the following categories of supply of goods are included provided they have been manufactured in India: (1) (2) Supply of goods against duty free licences issued under the Duty Exemption Scheme. Supply of goods to: (a) (b) (c) (d) (3) (4) (5) (6) (7) Export Oriented Units (EOUs). Export Processing Zones (EPZs). Software Technology Parks (STPs). Electronic Hardware Technology Parks (EHTPs).

Supply of capital goods to holders of licences under the Export Promotion Capital Goods (EPCG) Scheme. Supply of goods to projects financed by multilateral of bilateral agencies as notified by the Department of Economic Affairs, Ministry of Finance under international competitive bidding. Supply of capital goods and spares to the extent of 10% of FOB value to fertilizer plants. Supply of goods to any project approved by the Ministry of Finance at zero customs duty. Supply of goods to the power, oil and gas sectors approved by Ministry of Finance.

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Benefits of Deemed Exports

Deemed exports shall be eligible for the following benefits as regards manufacture and supply of goods: (1) (2) (3) (4) Deemed Exports Drawback Scheme. Refund of Excise Duty. Special Import Licence/Advance Intermediate Licence. Special Import Licence @ 6% of the FOB value (excluding all taxes and levies).

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CONCLUSION

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BIBLIOGRPHY
SEARCH ENGINES: www.google.com www.yahoo.com www.wikipedia.com BOOKS: EXPORT-IMPORT PROCEDURES & DOCUMENTATION Written by N.G. KALE & M. AHMED Published by Vipuls BMS Series.

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