Export Promotion Schemes

Export promotion schemes in India are designed to offset infrastructural inefficiencies, neutralize domestic taxes, and provide a competitive level playing field for domestic manufacturers in the global market. The Foreign Trade Policy (FTP) forms the bedrock of these economic measures, primarily administered by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry.

Mandatory Baseline Registrations

To leverage any government export incentive scheme, an exporter must secure two critical institutional credentials:

• Importer-Exporter Code (IEC): A unique 10-digit identification number issued by the DGFT using an entity’s Permanent Account Number (PAN). It requires no renewal.
• Registration-Cum-Membership Certificate (RCMC): Issued by designated Export Promotion Councils (EPCs) or Commodity Boards, validating the exporter’s specific industry alignment.

Duty Remission and Tax Neutralization Schemes

These schemes ensure that domestic taxes and duties are not exported, maintaining compliance with the World Trade Organization (WTO) guidelines which prohibit direct export subsidies but allow the remission of internal levies.

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

Launched on January 1, 2021, the RoDTEP scheme replaced the older Merchandise Exports from India Scheme (MEIS) after the latter was declared non-compliant with WTO rules due to its direct subsidy nature.

• Mechanism: It creates a mechanism to refund previously unrebated hidden taxes embedded in the production chain, such as Value Added Tax (VAT) on transportation fuel, electricity duties, mandi tax levied by APMCs, toll taxes, and stamp duties.
• Instrument: Refunds are issued via the ICEGATE portal as digital, freely transferable duty credit e-scrips used to clear basic customs duties.
• Exclusions: Generally excludes Special Economic Zones (SEZs) and Export Oriented Units (EOUs) unless specifically extended via exceptional notifications.

Rebate of State and Central Levies and Taxes (RoSCTL) Scheme

Implemented on March 7, 2019, this scheme runs parallel to RoDTEP but is exclusively dedicated to the highly labor-intensive textile and apparel sectors (ready-made garments and made-ups). It clears central and state structural tax overburdens via transferable duty credit scrips.

Duty Drawback (DBK) Scheme

Administered by the Department of Revenue under the Ministry of Finance, this post-export mechanism refunds customs and central excise duties paid on imported or domestic inputs used in manufacturing exported goods.

Duty Exemption and Input Importation Schemes

These proactive measures enable manufacturers to import requisite raw materials or capital equipment with a zero-duty structure, provided specific physical obligations are fulfilled.

Advance Authorisation Scheme (AAS)

AAS permits the duty-free import of raw materials, fuel, oil, catalysts, and packaging materials physically incorporated into the final export product.

• Value Addition: Requires a mandatory minimum value addition of 15% (scaled up to 25% for spices and 50% for tea).
• Timelines: The authorization remains valid for making imports for 12 months, and the structural Export Obligation (EO) must be fulfilled within 18 months from the date of issue.
• Actual User Condition: Materials imported under AAS cannot be transferred or sold; they must be consumed by the designated manufacturing unit.

Duty Free Import Authorisation (DFIA) Scheme

A post-export variant of the Advance Authorisation Scheme. It allows duty-free import of inputs but is restricted strictly to the exemption of Basic Customs Duty (BCD).

• Value Addition: Imposes a higher mandatory minimum value addition threshold of 20%.
• Transferability: Unlike AAS, once the export obligation is fulfilled, the DFIA license or the imported inputs can be freely sold or transferred in the open market.

Export Promotion Capital Goods (EPCG) Scheme

This scheme focuses on technological upgradation by allowing the import of capital goods (machinery, spare parts, tools) for pre-production, production, and post-production stages at zero customs duty.

• Export Obligation: Exporters must fulfill an obligation equivalent to 6 times the total duty saved, which must be achieved within a strict timeframe of 6 years from the license issue date.
• Indigenous Incentive: If the capital goods are procured from domestic manufacturers, the export obligation is reduced by 25% to promote the ‘Make in India’ initiative.

Credit, Infrastructure, and Market Access Schemes

Interest Equalization Scheme (IES)

Provides pre-shipment and post-shipment export credit to exporters in Indian Rupees at concessional interest rates.

• Subsidy Structure: Offers a 5% interest subvention/equalization rate for all MSME manufacturers, and a 3% rate for merchant and manufacturer exporters operating across 416 identified tariff lines.

Export Credit Insurance Scheme (NIRVIK)

Introduced through the Export Credit Guarantee Corporation (ECGC), the NIRVIK scheme expands credit availability by mitigating bank lending risks.

• Coverage: Provides up to 90% insurance cover on both principal and interest for export financing.
• Scope: Covers non-payment of export credit due to commercial or political risks, thereby lowering interest rates for exporters. It does not replace marine cargo insurance.

Market Access Initiative (MAI) Scheme

An export promotion scheme operating on a focused product-country matrix. It acts as a financial catalyst by funding market studies, international trade fairs, buyer-seller meets, and brand promotion campaigns through recognized Export Promotion Organizations and National Level Institutions.

Trade Infrastructure for Export Scheme (TIES)

A infrastructure scheme targeted at resolving export supply-chain bottlenecks. It provides central assistance via grants-in-aid to federal and state government agencies to create or upgrade export infrastructure like cold chains, border haats, quality testing labs, and ports.

Comparative Analytical Matrix of Primary Schemes

Macro Economics and Prelims Trivia Bits

Towns of Export Excellence (TEE)

Industrial clusters and towns producing goods exceeding a threshold value of ₹750 crore (reduced to ₹150 crore for handloom, handicraft, agriculture, and fisheries sectors) are notified as TEEs. They receive priority funding under the MAI scheme for infrastructure development and global marketing.

Electronic Bank Realisation Certificate (e-BRC)

An official digital document issued by commercial banks certifying that the exporter has successfully realized the foreign exchange payment from the buyer against an export transaction. It is an indispensable evidentiary document required by the DGFT to process and discharge export obligations under various schemes.

Districts as Export Hubs (DEH) Initiative

An institutional coordination mechanism mapping unique products with export potential across all Indian districts. District Export Promotion Committees (DEPCs) are set up to eliminate localized logistical bottlenecks, boost grassroots manufacturing, and expand regional employment patterns.