1. EXPORT ASSISTANCE, IMPORT FACILITY,
TAX CONCESSIONS AND DUTY
DRAWBACKS
PRESENTED BY-
DEEPSHIKHA AGARWAL
HARSHIT MALHOTRA
KAMAL KUMAR
KOMAL AGRAWAL

2. Director General Of Foreign Trade
The Directorate is headed by the Director General of
Foreign Trade and is responsible for:
 formulating
 executing , the Foreign Trade Policy/ Exim policy.
 with the objective of promoting Indian exports DGFT also
issues licenses to exporters & monitors their
corresponding obligations.

3. Export Promotion Measures In India
• Excise Duty Refund :tax imposed by the Central Government
on goods manufactured in India.
• This duty is collected at source, that is before removal of
goods from the factory premises.
• Fiscal incentives Exemption from Income Tax: In order to
enable the exporters to plough back their earnings and
promote exports, the Government has given IT exemption to
exporters under section 80HHC of the I.Tax Act .
• Similarly long term tax holidays are allowed to 100% EOUs in
designated areas such as EPZs, SEZs etc.

4. Export Promotion schemes & Incentives
Duty Exemption Schemes- Advance license
 Advance license (authorization) issued to allow duty free import
of inputs, which are physically incorporated in export product.
 These schemes are : Advance Authorization Duty Free Import
Authorization (DFIA)
 Advance license holders are exempted from payment of
 customs duty,
 additional customs duty
 anti dumping duty
 education cess
 safeguard duty.

5. Duty Exemption Schemes- Advance license
• Duty Exemption Schemes-
This scheme is considered useful when a standard
product is manufactured in large quantities & standard
raw materials are used for production.
Duty free import of mandatory spares upto 10% of CIF
value of license are also allowed.

6. Export Promotion Schemes & IncentivesDuty
Exemption & Remission Schemes
 Duty Exemption schemes enable duty free import of
inputs required for export production.
 The new scheme offers the facility to import required
inputs before the exports & allows transferability of
scrip once the export obligation is fulfilled.
 Duty remission scheme consists of
 Duty Entitlement Passbook Scheme (DEPB)
 Duty Drawback scheme (DBK).

7. Export Promotion Schemes & IncentivesDuty
Remission Schemes
• Under this scheme, grant of customs duty credit against
the exported product, is provided on the import content
of the product exported.
• The credit is granted on post- export basis, as a
specified percentage of FOB value.
• DEPB is a fully transferable instrument, which can be
availed of by the manufacturer as well as the merchant
exporter.

8. Duty Remission Schemes Duty drawback
Scheme (DBK)
Duty drawback is defined as the rebate of duty
chargeable on any imported or excisable material used in
the manufacture of goods exported from India.
• These are calculated On the basis of average
consumption of inputs, duties & taxes paid, quantity of
wastage & export price of exported products.
• These are given either on quantity basis (per kg) or on ad
valorem basis (as % of FOB value) & are reviewed and
revised periodically.

9. Marketing Development Assistance (MDA)
• Under MDA, exporters with turnover upto Rs. 15.00 crores
are eligible for financial assistance for a range of export
promotions activities such as participation in Trade Fairs,
buyer-seller meets abroad or in India , export promotion
seminars etc.
• Financial assistance with travel grants is available to
exporters traveling to Latin America, Africa, CIS region,
ASEAN countries, Australia & New Zealand.

10. Market Access Initiative (MAI)
• This scheme is intended to provide financial assistance for
medium term export promotion efforts with a sharp focus on
a country & product.
• Export Promotion Councils (EPC) Industry & Trade
Associations, Agencies of State governments, Indian
Commercial Missions abroad are eligible for assistance under
this scheme.
• Range of activities can be funded by MAI scheme. These
include: market studies, setting up of
showrooms/warehouses, sales promotion & publicity
campaigns, participation in international trade fairs etc.
• Financial assistance ranging from 25% to 100% of total costs
can be received

11. Served from India Scheme (SFIS)Service Exports
• Objective is to accelerate growth in exports of services so
as to create a powerful & unique “Served From India”
brand, instantly recognized and respected.
• All service providers of services listed, who have a total
free foreign exchange earning of at least Rs. 10 Lakhs in
preceding year will qualify for duty credit scrip equivalent
to 10% of free F.E.

12. Special Economic Zones(SEZ)
• specifically designated duty free enclave which shall be
deemed to be a foreign territory for the purpose of trade
operations & duties & tariffs.
• The policy provides for setting up of SEZ in the
public, private & joint sectors or by state governments.
The Government has already converted a number of
Export Processing Zones (EPZ) to SEZ.
• SEZ units can retain 100% of their export proceeds in
Exchange Earner’s Foreign Currency (EEFC) account.

13. Some of the features of SEZ are:
 Export & Import : Goods & services going into the SEZ area
from DTA shall be treated as deemed exports and the domestic
suppliers are eligible for deemed export benefits.
 Similarly, goods & services coming from SEZ area into DTA
shall be treated as if the goods are being imported. The entire
production of SEZ must be exported & DTA sales are permitted
only after payment of full applicable customs duties.
 Activities permissible : Foreign direct Investments: (FDI) : FDI
upto 100% is allowed through automatic route for all
manufacturing activities, except prohibited items.
Promotional Package: Exemption from payment of CED on
procurement of capital goods, raw materials, consumable
spares etc. from the domestic market.

14. Export & Trading Houses
• Merchant as well as Manufacturer Exporters, Service
Providers, EOUs & units located in SEZs , AEZs, Electronic
Hardware Technology Parks (EHTPs), Software Technology
Parks (STPs) & Bio-Technology Parks (BTPs) shall be eligible
for status.
 Status holder will be eligible for a number of facilities
including :
Authorization & customs clearance for both imports &
exports, on self-declaration basis.
100% retention of foreign exchange on EEFC account
Enhancement of normal repatriation period from 180 days
to 360 days.

15. Assistance to States for Infrastructural
Development of Exports (ASIDE)
• Under this scheme, the Department of Commerce provides
funds to states for development of infrastructure on the
basis of twin criteria of gross exports & rate of growth of
exports in such states.
• Objectives of ASIDE include developing infrastructure such
as roads connecting production centres with ports
 setting up of Internal container depots (ICD) & container
freight Stations (CFS)
 Setting up of infrastructure facilities like roads, power
stabilization, minor ports, effluent treatment plans etc
 Creation of State level industrial parks & equity
participation in infrastructure projects

16. Scheme for status holder
1. Additional Duty Credit Scrips shall be given to Status Holders @
1% of the FOB value of past exports accelerate exports and
encourage technological up gradation.
2. This facility shall be available for sectors of leather (excluding
finished leather), textiles and jute, handicrafts, engineering
(excluding Iron & steel & non-ferrous metals in primary and
intermediate form, automobiles & two wheelers, nuclear
reactors & parts, and ships, boats and floating
structures), plastics and basic chemicals (excluding pharma
products).‡
3. This facility shall be available up to 31 March, 2011.
4. Transferability for the Duty Credit scrips being issued to status
holders under VKGUY Scheme permitted only for the
procurement of cold chain equipments.

17. Assistance for marine product
• ‡Fisheries exempted from maintenance of average
EO under EPCG Scheme (along with 7 sectors)
however Fishing Trawlers, boats, ships and other
similar items shall not be allowed for this exemption
• Additional flexibility under Target Plus Scheme (TPS)
/ Duty Free Certificate of Entitlement (DFCE) Scheme
for the marine sector.

18. Assistance for Gems and Jewellery sector
• ‡Duty Drawback is allowed on Gold Jewellery exports to
neutralize duty incidence.
• Plan to establish "Diamond Bourse (s) with an aim to make
India and International Trading Hub announced.
• Introduction of a new facility to allow import on consignment
basis of cut & polished diamonds for the purpose of grading/
certification.‡‡
EPCG Scheme:
Obligation under EPCG scheme relaxed.
 To aid technological up gradation of export sector, EPCG
Scheme at Zero Duty has been introduced.
 Export obligation on import of spares, moulds etc.
under EPCG Scheme has been reduced by 50%.

19. Assistance for pharma exports
• ‡Export Obligation Period for advance authorizations
issued increased from existing 6 months to 36
months.
• Pharma sector included under MLFPS for countries in
Africa and Latin America & some countries in
Oceania and Far East.

20. Assistance for Exports Oriented Units
• EOUs have been allowed to sell products manufactured by
them in DTA (Domestic Tariff Area) upto a limit of 90% instead
of existing 75%, without changing the criteria of similar goods
, within the overall entitlement of 50% for DTA sale. (This
means that instead of 75% these units can sell up to 90 % of
their products in the domestic markets)
• EOU allowed to procure finished goods for consolidation
along with their manufactured goods, subject to certain
safeguards.
• Extension of block period by one year for calculation of Net
Foreign Exchange earning of EOUs kept under consideration.
• EOU allowed CENVAT Credit Facility.

21. Support for Market and Product
Diversification
• 26 new markets have been added under Focus
Market Scheme.
• The incentive available under Focus Market Scheme
(FMS) has been raised from 2.5% to 3%.
• The incentive available under Focus Product Scheme
(FPS) has been raised from 1.25% to 2%.
• Extra products have been included in the scope of
benefits under FMS.

22. Announcements for MDA & MAI:
Higher allocation for Market Development Assistance (MDA) and
Market Access Initiative (MAI) has been announced.
Towns of Export Excellence (TEE)
The following cities have been recognized as towns of export
excellence (TEE)
Handicrafts : Jaipur, Srinagar and Anantnag
Leather Products : Kanpur, Dewas and Ambur
Horticultural Products: Malihabad

23. IMPORT FACILITY

24. BASIC FACTORS INFLUENCING IMPORT
POLICY
• The economic needs of the country
• effective use of foreign exchange
• industrial as well as consumer requirements

25. OBJECTIVES OF IMPORT POLICY
• On the import side the policy has three
objectives:
• to make necessary imported goods more easily
available, including essential capital goods for
modernizing and upgrading technology;
• to simplify and streamline procedures for import
licensing;
• to promote efficient import substitution and self-
reliance.

26. • Imports are allowed free of duty for export
production.
• Eg.
An EOU/EHTP/STP/BTP unit may import and/or
procure from DTA or bonded warehouses in
DTA/international exhibition held in India without
payment of duty all types of goods, including
capital goods, required for its activities, provided
they are not prohibited items of import in the ITC
(HS).

27. • Input output norms have been specified for
more than 4200 items which tell about the
amount of duty free import of inputs allowed
for specified products.
• There are no restrictions on imports of capital
goods.
• Import of second hand capital goods whose
minimum residual life is of five years is
permitted.

28. • Export Promotion Capital Goods (EPCG)
scheme provides exporters to import capital
goods at a concessionary custom rates. In the
past 30 years Indian imports have risen quite
dramatically.
• At present imports accounts for 17% of the
GDP. Capital goods have been continued to be
imported and in the last three years, their
share has fallen from 25% to 22%.

29. • A new 8-digit commodity classification based
ITC Harmonised System of coding for imports
were adopted in 2002. The common
classification used by the Directorate General
of Foreign Trade (DGFT) and Customs helps
eliminate classification disputes and reduce
transaction costs and time.

30. • The Department of Revenue, Ministry of Finance,
Government of India has issued a Customs Notification
No.107/2008 notifying the duty concessions applicable
for import of about 259 specified items under South
Asian Free Trade Agreement (SAFTA).
• applicable for import of specified items from four
countries namely Bangladesh, Bhutan, Maldives and
Nepal. Also, the extent of tariff concession will be on
the applied or standard rate of import duty.

32. TAX CONCESSIONS

33. Tax Incentives-Infrastructure sector
• The tax incentives offered to the investors by the Government
of India are a boon for firms involved in IT outsourcing to
India. The incentives that facilitate economic growth and
development are:
• 1. Infrastructure:
• A 10 years tax holiday to ventures engaged in developing and
/ or maintaining and operating an infrastructure facility.
• 2. Power:
• 10 years tax holiday to undertakings, which generate and / or
distribute power.
• 3. Telecom:
• 5 years tax holiday for companies providing telecom services
including Internet services and broadband services. Also 30 %
deduction from profits for the next 5 years in any 10
continuous years out of first 10 years is also offered.

34. Tax Incentives
• 4. Industrial Parks and Special Economic Zones
• 10 years tax holiday is applicable to ventures that develop and /or
operate or maintain in notified IT parks and special economic zones.
• 5. Other Industries:
• 5-year tax holiday is available for new industrial units to be set up in
backward states and districts.
• 6. Incentives for Exports:
• No Tax is deducted on exporters profits for unit set up on EPZs,
STPs, EHTPs, FTZ and SEZs.
• 7. Other Incentives:
• Tax concessions are allowed for FTI and a weighted deduction of
150% for scientific research and development expenditure have
been offered. 10 years tax holiday is available for R&D companies
engaged in scientific and industrial research.

35. AGRICULTURE
• The various benefits offered by the Finance Minister to
support agriculture sector in Union budget 2010 are:
• Complete service tax exemption for the establishment and
sponsoring of such apparatus.
• Complete customs tax exemption for refrigeration divisions
required for the production of chilled vans or trucks
• Benefit of 5% concessional customs tariffs on particular
agricultural equipment not created in India

36. • Tax exemption from central excise tariff on
particular equipment for conservation and
processing of agriculture and associated sectors
• Tax exemption from service tariff on the
conservation and warehousing of farm produce.
• Service tax exemption on the testing and
documentation of agricultural seeds
• Service tax exemption on the transportation of
cereals and pulses by rail and road.

37. • Indirect Taxes
• Restore the basic duty of 5 per cent on crude petroleum; 7.5
per cent on diesel and petrol and 10 per cent on other refined
products. Central Excise duty on petrol and diesel enhanced
by Re.1 per litre each.
• The government has levied a one rupee per liter excise duty
on gasoline and diesel this may increase transportation cost.

38. • Agriculture & Related Sectors
• Provide full exemption from customs duty to
refrigeration units required for the manufacture
of refrigerated vans or trucks.
• Provide concessional customs duty of 5 per cent
to specified agricultural machinery not
manufactured in India;

39. • Provide central excise exemption to specified
equipment for preservation, storage and processing
of agriculture and related sectors and exemption
from service tax to the storage and warehousing of
their produce; and
• Provide full exemption from excise duty to trailers
and semi-trailers used in agriculture

40. • To exempt the testing and certification of agricultural
seeds from service tax.
This will help to reduce the cost of certified seeds
manufacturers and at the same time farmers can afford
it at lower price.
• The transportation by road of cereals, and pulses to be
exempted from service tax. Transportation by rail to
remain exempt.

41. • To ease the cash flow position for small-scale
manufacturers, they would be permitted to take full
credit of Central Excise duty paid on capital goods in
a single installment in the year of their receipt.
Secondly, they would be permitted to pay Central
Excise duty on a quarterly, rather than monthly,
basis.
• Reduction in basic customs duty on long pepper from
70 per cent to 30 per cent;
• Reduction in central excise duty on latex rubber
thread from 8 per cent to 4 per cent;

42. • Excise duty has been rolled back to 10 % from
8 %. Owing to this Steel Authority of India
(SAIL) is expected to raise long product prices
by Rs.1,000 a ton in March in order to pass on
the higher duty burden.

43. SEZ
• A Special Economic Zone (SEZ) is a geographical
region that has economic laws that are more
liberal than a country's typical economic laws.
The category 'SEZ' covers a broad range of more
specific zone types, including Free Trade Zones
(FTZ), Export Processing Zones (EPZ), Free Zones
(FZ), Industrial Estates (IE), Free Ports, Urban
Enterprise Zones and others. Usually the goal of a
structure is to increase foreign direct investment
by foreign investors, typically an international
business or a multinational corporation (MNC).

44. TAX CONCESSIONS TO SEZ’s
• exemption from customs duty on goods imported
into the SEZ by the Developer or SEZ Unit to carry
on the authorised operations;
• exemption from customs duty on goods exported
from the SEZ by the Developer or SEZ Unit to any
place outside India;
• exemption from excise duty on goods brought
from Domestic Tariff Area ("DTA") to the SEZ by
the Developer or SEZ unit to carry on the
authorized operations

45. • Exemption from Capital Gains
Capital gains arising on transfer of assets
(machinery, plant, building, land or any rights
in buildings or land) on shifting of the
industrial undertaking from an urban area to
any SEZ would be exempt from capital gains
tax.

46. • No TDS by Overseas banking Units (OBUs) on
interest on deposits/borrowings from non-
resident or person not ordinarily resident

47. SEZ’s
• Income tax:-
• Deduction from Profits and Gains from export
of goods/services as follows (Section 10AA)-
100% income tax exemption for first 5 years
50% income tax exemption for next 5 years
• No MAT (Minimum Alternate Tax)

48. Indirect taxes
• SEZ units may import or procure from the
domestic sources. Duty free, all their
requirements of capital goods, raw materials,
consumables, spares, packaging materials, office
equipment, DG sets etc. for implementation of
their project in the Zone without any license or
specific approval
• No import duty on these goods imported
• No excise duty on these goods procured from
DTA (Domestic Tariff Area)

49. • No service tax on services availed from DTA
(Domestic Tariff Area)
• No Value Added Tax (VAT) and Central Sales Tax
(CST) on goods procured from DTA (Domestic
Tariff Area)
• On goods procured from DTA, drawback under
section 75 allowed to SEZ unit
• Goods imported/procured locally duty free could
be utilised over the approval period of 5 years

51. GEMS AND JEWELLERY
• Import duties:
• Reduce the import duty on both Gold and
Silver including precious metal scrap and
should be allowed at 0% (zero) duty.

52. • Reduce import duties on finished jewellery
into India.
• Recommends uniform VAT rates of 1% to be
implemented across India and maintain the
same rate. In addition the above, clarification
is to be given to all states that VAT set off is to
be allowed when raw material is issued from
one state to another state for manufacturing
of jewellery.

53. DUTY DRAWBACKS
SCHEME

54. WHAT IS DUTY DRAWBACK SCHEME?
• Under the Duty Drawback Scheme
administered by Customs & Central Excise
Department the duties paid on inputs and
service tax paid on input services used in the
manufacture of export goods are refunded to
the exporters in the form of drawback. The
drawback rates are worked out and notified
every year after taking into account the
budgetary changes in the duty structure and
other relevant facts.

55. • The exercise is underway in the Ministry to re-
work and revise the rates of duty drawback for
the year 2009-2010.
• All Industry Rates of Duty Drawback are
worked out by considering the consumption
of input materials/ services and the incidence
of duties/taxes on these input materials/
services.

56. KINDS OF DRAWBACKS
• Unused Merchandise:
Imported merchandise is unused and exported or
destroyed under Customs supervision. 99 percent of
the duties, taxes or fees paid on the merchandise may
be recovered as drawback.
• Substitution Unused Merchandise:
Merchandise that is commercially interchangeable with
imported merchandise upon which duties and taxes
were paid and that has not been used, is exported or
destroyed under Customs supervision. 99 percent of
the duties, taxes or fees paid on the merchandise may
be recovered as drawback.

57. • Rejected Merchandise:
Merchandise is exported or destroyed because it
does not conform with samples or specifications, or
has been shipped without the consent of the
consignee, or has been determined to be defective
as of the time of importation. 99 percent of the
duties which were paid on the merchandise may be
recovered as drawback.
• Direct Identification Manufacturing: If articles
manufactured in the United States with the use of
imported merchandise are subsequently exported
or destroyed then drawback not exceeding 99
percent of the duties paid on the imported
merchandise may be recoverable.

58. • Substitution Manufacturing:
Both imported merchandise and any other
merchandise of the same kind and quality are
used to manufacture articles, some of which
are exported or destroyed before use, then
drawback not exceeding 99 percent of the
duty which was paid on the imported
merchandise may be payable on the
exported/destroyed articles

59. How to Obtain Drawback
• The guidelines for completing a drawback claim are
provided in the Customs Regulations, more specifically
19 CFR 191 Subpart E. We can help you with the
application process, prepare inventory record and file
the claim.
• The locations for filing a drawback claim are Boston,
Chicago, Houston, Los Angeles, Miami, New Orleans,
Newark, and San Francisco.
• A drawback entry and all documents necessary to
complete a claim generally must be filed within three
years after exportation or destruction of the articles

60. MANUFACTURING DRAWBACK
RULINGS
To obtain drawback, a manufacturer or producer of articles intended
to be claimed for drawback must first apply for a manufacturing
drawback ruling. There are two types of manufacturing drawback
rulings: (1) General and (2) Specific.
(1).General Manufacturing Drawback Ruling
General manufacturing drawback rulings are provided for in Section
191.7, of the Customs Regulations (19 C.F.R. §191.7) and are
designed to simplify drawback for certain common manufacturing
operations.

61. • (2) Specific Manufacturing Drawback Ruling
Where a manufacturer or producer cannot follow
any one of the prescribed general manufacturing
rulings without variation, the manufacturer or
producer must apply for a specific manufacturing
drawback ruling under Section 191.8. Sample
formats for specific manufacturing drawback
rulings are contained in Appendix B to Part 191,
Customs Regulations (19 C.F.R. Part 191).

62. Export Procedure
Duty Drawback – for Past Exports. Waiver form
requirement of prior notice of intent to export must
be supported by a direct inventory identification
method.
The conditions for identification by accounting
method are:
• The lots of merchandise must be fungible
• Inventory records must establish that the lots
so identified as being received into and withdrawn
from the same inventory are being used in the
ordinary course of business.

63. • All receipts into and all withdrawals from the
inventory must be recorded in the accounting
record. Subject to verification by Customs .
• It must be used without variation for a period of
at least one year unless approval is given by
Custom for a shorter period.

64. • Waiver of Prior Notice of Intent to Export
You may be eligible for Waiver of Prior Notice
under Section 191.91 of the Customs
Regulations. The approval is based on the
submission of an application and compliance
with the regulations.
• Claim Period
In the case of unused merchandise drawback, it
is necessary to establish that the merchandise
was exported or destroyed within three years
from the date of import

65. • In the case of rejected merchandise drawback,
you must establish that the merchandise was
returned to Customs custody within three years
after it was originally released from Customs
custody.
• In the case of manufacturing drawback, you
must establish that manufactured articles on
which drawback is being claimed were exported
within five years from the date of import.

66. Payment of Drawback Claims
• When a claim has been determined to be
complete and satisfies all drawback
requirements, the drawback amount is verified
and the entry liquidated for the refund due.
Drawback is payable to the exporter/destroyer
unless the right to claim drawback has been
transferred to a third party through a Certificate
of Delivery and/or Manufacture. Furthermore,
the exporter/destroyer must certify that
drawback on the particular exportation or
destruction will not be assigned to any other
party.

67. THANK YOU