1. Schemes For Encouraging Exports

2. Export Incentives for Manufacturer Indigenous inputs w/o payment of excise duty No excise duty charged on final product Imported inputs w/o payment of customs duty No export duty on export of final product Fast finance at concessional interest rates Exemption from income tax Exemption from SALES TAX on final product (refund ofCST paid on inputs in certain cases) 3. Input Duty Relief Scheme Various schemes to obtain duty free inputs OR getrefund later Some schemes unit has to be isolated from domesticproduction units e.g. EOU, STP, EHTP and SEZ 4. Salient features of SEZ scheme Duty free import/domestic procurement of goods for development,operation and maintenance of SEZ units 100% Income Tax exemption on export income for SEZ units underSection 10AA of the Income Tax Act for first 5 years, 50% for next5 years thereafter and 50% of the ploughed back export profit fornext 5 years. Exemption from minimum alternate tax under section 115JB of theIncome Tax Act. External commercial borrowing by SEZ units upto US $ 500 millionin a year without any maturity restriction through recognizedbanking channels. Exemption from Central Sales Tax. Exemption from Service Tax. Single window clearance for Central and State level approvals. Exemption from State sales tax and other levies as extended by therespective State Governments 5. Salient features of SEZ scheme Exemption from customs/excise duties for development ofSEZs for authorized operations approved by the BOA. Income Tax exemption on income derived from the businessof development of the SEZ in a block of 10 years in 15 yearsunder Section 80-IAB of the Income Tax Act. Exemption from minimum alternate tax under Section 115 JBof the Income Tax Act. Exemption from dividend distribution tax under Section 115Oof the Income Tax Act. Exemption from Central Sales Tax (CST). Exemption from Service Tax (Section 7, 26 and SecondSchedule of the SEZ Act). 6. Salient features of EOU scheme No license required for import. Exemption from Central Excise Duty in procurement of capital goods, raw-materials, consumables spares etc. from the domestic market. Exemption from customs duty on import of capital goods, raw materials,consumables spares etc. Reimbursement of Central Sales Tax (CST) paid on domestic purchases. Supplies from DTA to EOUs treated as deemed exports. Reimbursement of duty paid on furnace oil, procured from domestic oilcompanies to EOUs as per the rate of drawback notified by the DirectorateGeneral of Foreign Trade. Facility to retain 100% foreign exchange proceeds in EEFC Account. Facility to realize and repatriate export proceeds within twelve months 100% Foreign Direct Investment permisisible. Exchange earners foreign currency (EEFC) Account 7. Salient features of EOU scheme Re-export of imported goods found defective, goods imported fromforeign suppliers on loan basis etc. Exemption from industrial licensing requirement for items reservedfor SSI sector. Profits allowed to be repatriated freely without any dividendbalancing requirement Access to Domestic Market upto 50% of FOB value of export onconcessional rate of duty. Duty free goods to be utilized in two years. Further extensiongranted on liberal basis. Job work on behalf of domestic exporters for direct export allowed. Conversion of existing Domestic Tariff Area ( DTA) unit into anEOU permitted 8. Supplies made to EOU by Indian supplier are deemedexports and supplier is entitled to benefits of deemedexport Supplies to SEZ are exports and all export benefits areavailable Restrictions under Companies Act on managerialremuneration are not applicable 9. Have to achieve +ve NFE (Net Foreign ExchangeEarnings). A= FOB value of exports B = CIF Value of all imported inputs and capital goodsand all payments made in foreign exchangeNFE = A B 10. EOUSEZ EOU unit can be set up at any SEZ unit has to be locatedof over 300 places all over within the specified zonesIndia developed Fast Track Clearance Scheme Customs clearance for export(FTCS) for clearances ofand import is obtained withinimported consignments the zone itself Minimum investment in plant No such limitand machinery and building =Rs 1 crore. This should bebefore commencement of Difficult to exitcommercial production Easy to exit 11. STP / EHTP unit Concept of STP/EHTP is similar to EOU/SEZ. Administered by Ministry of Information Technology. STP/EHTP unit can be set up as an EOU unit anywhere inIndia or as a SEZ unit at specified developed locations inIndia. A software development firm qualifies as STP/EHTP unit. Can import goods on loan from clients for specificperiod. Can export software electronically or through physicaltransport. 12. Other schemes domestic producers are also entitled toget inputs/capital goods free of taxes, e.g. Advance License scheme Duty Entitlement Pass Book scheme (DEPB) Duty Free Replenishment Certificate scheme (DFRC) EPCG scheme Rebate of duty on inputs if final product is exempt from duty Under duty drawback scheme, custom/excise duty paid on inputs isreturned as rebate 13. Next Topic INCO terms