Promotional Measures for Exports
Export promotion has been defined as “those public policy measures which actually or potentially enhance exporting activity at the company, industry, or national level”. Although many forces determine the international flow of goods and services, export promotion is one of the principal opportunities that governments have to influence the volume and types of goods and services exported from their areas of jurisdiction.
Government of India, like in almost all other nations, has been endeavoring to develop exports. Export development is important to the firm and to the economy as a whole. Government measures aim, normally, at an overall improvement of the export performance of the nation for the general benefit of the economy. Such measures help exporting firms in several ways.
Export Promotion strategy promotes only the industries that have potential for developing and competing with foreign rivals. Since the goal is to trade abroad, there becomes competition, which in turn remedies the returns to scale. The main goal of the export promotion is to prepare the “potential” industries for competition with the foreign rivals. So the industries at their childhood must be protected for a while.
Exporters, facing the increasing competition, have to improve their technologies, their quality continuously in order to compete with their rivals. They have to make research and development studies.
Comparative advantage theory implies that a country must specialize in the production that uses the mostly possessed factors of production. By this way the structure of the overall industry is in harmony with the country structure. If the country has advantage in human capital then the EP strategy may be a remedy to the unemployment problem.
The indirect effect of the EP strategy appears in the export values of the countries. The increase in exports raises the foreign exchange inflow. However, there may be an increase in import expenditures due to the increasing income of the country, which in turn worsens the country’s trade balance.
Promotional Measures for Exports
Promotional Measures give direct incentives to the exporters for
- Market Access Initiatives (for studies, brochures etc.),
- Marketing Development Assistance for participation in trade fairs etc.
- Providing services to international market
- Marketing in difficult markets like certain African, Latin American and CIS markets
- Marketing difficult products like those from rural areas.
- Special agricultural products, and rural industrial products.
- High-Technology Products
- Achieving quantum growth in exports under Erstwhile Target Plus Scheme
Some of the more popular scheme are :
Sfis (Served From India Scheme)
Gives a value of 10% of the FE earned from export of services in the previous year in the form of duty credit script. The Script can be used for duty free procurement of any Capital Goods or consumables related to any service sector business of the script holder, from International as well as domestic sources. In case of Hotels and Restaurants it can be used even for import of foods items and liquor. Is Actual User and non transferable (except within the group)
Vkguy (Vishesh Krishi and Gram Udyog Yojna)
The scheme offers a duty credit script equivalent to 5%/3% of previous year’s exports of certain agricultural & forest products. For flowers fruits and vegetable exporters it will be 7%/5% depending upon the benefits they are availing. The script is transferable to other importers
Fms (Focus Market Scheme)
The scheme incentivizes exports to Certain Latin American, African ,CIS Countries. It offers 3% of the previous year’s exports in the form of duty credit script, which is transferable
Fps (Focus Products Scheme)
The scheme incentivizes exports of certain items of rural and semi urban origin. It offers 2% of the previous year’s exports in the form of duty credit script, which is transferable. For the export of certain Toys and Sports Goods from 1.4.08, a script of up-to 6.25% value is available. For High value added products script of upto 2.5% is available.
(HTPEPS) High-Tech Products Export Promotion Scheme
Provides upto 1.25% of previous year’s exports in the form of a duty credit script. Alternatively a duty credit script of 5% of the incremental growth may be taken at the option of the exporter. All the above except SFIS can also be availed by EOU/EHTP/BTP who are not availing of direct tax benefits/exemptions.
What VJM & Associates Offers
We assist in identification of the benefits available under the relevant scheme which is suitable to your business. Further we do documentation required, application preparations, representation and coordination with DGFT and other concerned Government Departments till the receipt of final script. Later we will assist you in actually realizing the value of the script in cash.