As we know that Exports play a major role in the economic development of a country. More the exports more will be the inward foreign remittance, more jobs & employment, lower current account deficit, and hence greater overall economic growth. Therefore, India needs to increase its export performance and grow worldwide. The Government of India first time introduced 5 year Export Import Policy (EXIM) on 1st April, 1992. Export-Import Bank of India (EXIM Bank) was set up in 1982 to provide financial assistance to exporters and importers, and to finance export. The Government of India, Ministry of Commerce and Industry announced New Foreign Trade Policy on 01st April 2015 for the period 2015-2020, earlier this policy known as Export Import (Exim) Policy. In April 2020, the Government extended FTP for one more year, up to March 31, 2021.
GENERAL CONTROLS ON EXPORTS/IMPORTS
The Foreign Trade (Development and Regulation) Act 1992 (FTDR Act) formulates the export policy and issued orders regulating the export of goods. As per the Foreign Trade Policy of India 2015-2020 (FTP), exports and imports shall be ‘free’ except for prohibited/restricted/excluded items.
Export of items that do not require any authorisation, permission or licence from the DGFT subject to the policy conditions contained. Further, restrictions and prohibitions are applicable on export of certain classes of goods to specified countries. In addition to the prohibitions and restrictions prescribed in the FTDR Act, the FTP and Export Policy export of goods are also subject to conditions stipulated in acts or in law.
While exporting, an exporter must file a shipping bill with the customs authorities at the port declaring the description, nature and quantity of the goods under export. The said shipping bill must be accompanied by a packing list and invoice. Once the said documents are verified by the customs authorities, the goods may be exported.
While most products are not subject to an export duty, there are a few exceptions, such as coffee, tea, black pepper, sugar, iron ore and its concentrates, raw cotton, raw wool, specific jute items, and certain goods of iron or steel (tubes and pipes, bars and rods).
ROLE OF GOVT AGENCIES TO CONTROL EXPORT-IMPORT
Ministry of Commerce and Industry: It was set up in 1903.
Federation of Indian Export Organisation (FIEO): Established in 1965 (Ministry of Commerce, Government of India, 2021; Govenment of India, 2021) .
Indian Council of Arbitration (ICA): Established in 1965 (Govenment of India, 2021).
Central Board of Indirect Taxes and Customs (CBIC) : Established in 1855. (Department of Revenue under the Ministry of Finance, Government of India, 2021)
Department of Economic Affairs: Established in 1964. (Government of India,Minsitry of Finance, 2021)
Department of Revenue: (Goverment of India, Ministry of Finance, 2021)
The Directorate of Enforcement: Established in the year 1956. (Department of Revenue, Ministry of Finance, Government of India, 2021)
Cabinet Committee on Economic Affairs (CCEA): Established in 2014. (Government of India, Ministry of Finance, 2021)
Export Promotion Councils (EPCs): Established in 1965. (Goverment of India,Ministry of Commerce and Industry, 2021)
Directorate General of Foreign Trade (DGFT): Established in 1991. (Ministry of Commerce and Industry, 2021)
Reserve Bank of India: Established in 1935. (Reserve Bank of India, 2021)
Hierarchies
| Government of India | |||
| Ministry of Commerce | Ministry of Finance | Reserve Bank of India | Indian Council of Arbitration |
| Federation of Indian Export Organisation | Central Board of Indirect Taxes and Customs | ||
| Export Promotion Councils | Dept of Economic Affairs | ||
| Directorate General of Foreign Trade | Dept of Expenditure | ||
| Export Promotion Council | Dept of Revenue | ||
| Dept of Fin Service | |||
| Directorate of Enforcement | |||
| Department of Economic Affairs | |||
| Cabinet Committee on Economic Affairs |
Ministry of Commerce & Industry:
The Ministry of Commerce and Industry administers two departments, the Department of Commerce and the Department for Promotion of Industry & Internal Trade (formerly Department of Industrial Policy & Promotion).
Department of Commerce: The department is entrusted with formulating and implementing the foreign trade policy and responsibilities relating to multilateral and bilateral commercial relations, state trading, export promotion measures, and development and regulation of certain export oriented industries and commodities. In order for the smooth functioning, the Department handling foreign transactions is divided into eight divisions:
- Finance Division- The Integrated Finance (IF) Division is headed by the Additional Secretary & Financial Advisor, and consists of Chief Controller of Accounts (Commerce), Economic Adviser (Finance), three Under Secretaries in the Integrated Finance Units and a Budget and Accounts Section.
- International Trade Policy Division-International Trade Policy Division also called Trade Policy Division keeps abreast of the developments in the international trade organization like including the WTO, UNCTAD, ESCAP, etc. Matters like promotion of trade cooperation among developing countries, Commonwealth trade, multilateral trade, and tariff negotiations are also the responsibility of this Division.
- Economic Division- Major functions of this division includes a) Annual Monitoring and review of export performance against export targets b) Commissioning special research studies on international trade and its impact on the economy c) Analysis of overall trends in India’s Foreign Trade d) Studies of trend in trade with specific countries / regions e) All matters relating to adoption of HS Code, technical problems of trade classification etc. f) Import Monitoring-Quarterly appraisal of Imports g) Formulate an action plan to reduce import dependence of non-essential commodities
- Foreign Trade Territorial Division-The Division deals with Sub-Saharan African Region (Eastern, Western, Central and Southern) comprising 48 countries regarding trade promotion, policy, negotiations for FTA/PTA & other related activities.
- Export Product Division- The Division exercises administrative control over following organizations a) Agricultural & Processed Food Products Export Development Authority (APEDA) b) Tobacco Board.
- Export Industries Division- This division handles all aspects of the work relating to tea.
- Export Services Division- Major Functions of this division includes a) Implementation of the Market Access Initiative (MAI) Schemes b) General Policy matters relating to the Export Promotion Councils c) All matters relating to the Federation of Indian Export Organisations (FIEO).
- SEZ Division- Major functions of this division includes a) Handling of all Personnel Administration matters of SEZs b) Monitoring of the implementation of Make in India where the Department is the Administrative Department, in consultation with the concerned Divisions c) Handling Court Cases, RTI applications, Parliament Questions, proposals d) All work relating to Administration of Export Promotion Council for EOUs & SEZs (EPCES)
Ministry of Finance:
The Ministry of Finance is an important ministry within the Government of India concerned with the economy of India, serving as the Indian Treasury Department. In particular, it concerns itself with taxation, financial legislation, financial institutions, capital markets, centre and state finances, and the Union Budget. The Union Finance Ministry of India comprises five departments:
a) Department of Economic Affairs: The Department of Economic Affairs is the nodal agency of the Union Government to formulate and monitor country’s economic policies and programmes having a bearing on domestic and international aspects of economic management.
c) Department of Revenue: The Department of Revenue functions under the overall direction and control of the Secretary (Revenue). It exercises control in respect of matters relating to all the Direct and Indirect Union Taxes through two statutory Boards namely, the Central Board of Direct Taxes (CBDT) and the Central Board of Indirect Taxes and Customs (CBIC).
Reserve Bank of India:
It is India’s central bank, responsible for the issue and supply of the Indian rupee and the regulation of the Indian banking system. It also manages the country’s main payment systems and works to promote its economic development. There are various functions of the Reserve Bank of India. Besides, other important functions the Reserve Bank of India plays the role of Monetary Authority and Manager of Foreign Exchange. As the Monetary Authority aims to maintain price stability and ensure adequate flow of credit to productive sectors and being the Manager of Foreign Exchange, it seeks to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India. In India exports have played a major role in accelerating the economic growth of the country. The initiatives taken by Reserve Bank of India and Government of India have contributed to the impressive increase in our exports.
The RBI regulates the foreign exchange matters as per the FEMA Act. It issues guidelines for realization of export proceeds by the exporter from time to time through the authorized dealers.
Cabinet Committee on Economic Affairs (CCEA)
CCEA has a mandate to review economic trends on a continuous basis with a view to evolving a consistent and integrated economic policy framework for the country. It also directs and coordinates all policies and activities in the economic field including foreign investment. Matters regarding fixation of prices of agricultural products as well as reviewing progress of activities related to rural are in CCEA’s competence. Price controls of industrial raw materials and products, industrial licensing policies including industrial licensing cases for establishment of Joint Sector Undertakings, reviewing performance of Public Sector Undertakings including their structural and financial restructuring are also within the purview of CCEA.
Indian Council of Arbitration (ICA):
It was set up under the Societies Regulation Act and it settles the commercial disputes among the traders especially foreign/international trading.
Federation of Indian Export Organisation (FIEO):
It is an apex body deals with import-export duties. This organization was set up jointly by the Ministry of Commerce, Government of India and private trade and industry . It is a non-profit organizations set up by the Ministry of Commerce, Govt. of India.
FIEO is the premier body of all export promotion councils, commodity boards, and export development authorities in India. It provides the crucial interface between international trading community of India and the central and state governments, financial institutions, ports, railways, surface transport and all others engaged in export trade facilitation. Directly and indirectly, it serves the interests of about 2,00,000 exporters from goods and services sector in the country.
Export Promotion Councils (EPCs):
Under the administrative control of the Ministry of Commerce there are twelve EPCs. They perform both the advisory and executive functions and they are registered as non-profit organizations under the Companies Act. It was established in 1965.
Export Promotion Councils are government-initiated authorities that promote and support export firms in developing their overseas trade . Additionally, EPCs also promote government schemes, act as a data store and conduct overseas tours and studies. They also act as an intermediary between the government and the export industry and are critical in formulating the foreign policies of the country.
The Directorate of Enforcement:
It is responsible for enforcement of the Foreign Exchange Management Act, 1999 (FEMA) and certain provisions under the Prevention of Money Laundering Act. It is part of the Department of Revenue, Ministry of Finance, Government Of India.
It is a law enforcement agency and economic intelligence agency responsible for enforcing economic laws and fighting economic crime in India. It is part of the Department of Revenue, Ministry of Finance, Government of India.
Central Board of Indirect Taxes and Customs (CBIC)
The CBIC comes under the ministry of finance in controlling the authority to handle customs related issues. The CBEC publishes the “Indian Customs Tariff Guide” that provides every information about the rules and regulations of custom duties.
It is a part of the Department of Revenue under the Ministry of Finance, Government of India. It deals with the tasks of formulation of policy concerning levy and collection of Customs, Central Excise duties, Central Goods & Services Tax and IGST, prevention of smuggling and administration of matters relating to Customs, Central Excise, Central Goods & Services Tax, IGST and Narcotics to the extent under CBIC’s purview. The Board is the administrative authority for its subordinate organizations, including Custom Houses, Central Excise and Central GST Commissioners and the Central Revenues Control Laboratory.
Directorate General of Foreign Trade (DGFT):
The Directorate General of Foreign Trade is a government organization in our country which is responsible for formulating guidelines for imports and exports in our country. The main responsibilities include preparation, formulation, and implementation of Exim Policies. It is also responsible for assigning an import-export code(IEC). Before 1991, DGFT was known as the Chief Controller of Imports & Exports (CCI&E).
FUNCTIONALITY LEVELS:
Based on role and functions, I am plotting the same under four levels: Level-1 – Formulating and implementing policies and guideline, Level-2- Review, Regulate and monitoring, Level-3- Control and Level-4- Support and Arbitration.
| Levels | Heads | Organisations | Functions |
| 1 | Formulating and Implementing Policies and Guideline | Directorate General of Foreign Trade (DGFT) Department of Economic Affair | Formulates Guidelines of Import and export and implements EXIM policy.
Formulating and monitoring country’s economic policies |
| 2 | Review, Regulates and Monitoring | Cabinet Committee on Economic Affair Reserve Bank of India | Review economic trend to frame economic. Regulates foreign exchange matters |
| 3 | Control | Central Board of Indirect Tax and Customs The Directorate of Enforcement Department of Revenue | Handles customs related issues and publish “ Indian Customs Tariff Guide.
Law enforcement agency and economic intelligence agency . Responsible for enforcing laws and fights economic crime. Controls in respect of indirect taxes and customs |
| 4 | Support and Arbitration | Export Promotion Councils Federation of Indian Export Organisations Indian council of Arbitration | Promoting Government schemes and support export firms in developing trade.
Import and export duties. Settle commercial disputes especially foreign/international trade |
CONTROL MEASURES
One of the main reasons of involvement of Customs is to ensure nothing goes out of the country against the laws of the land and the goods within a country should not be moved out of a country without the knowledge of government of an exporting country. Also the movement of goods in to a country also needs to be monitored by government of each importing country.
Assessing value of goods is major objective of customs under both exports and imports. So customs ensure authenticity of value of outward cargo according to the customs valuation rules to check over and under invoicing. One of the other objectives of customs control on import and export is to assess and realize export duty/cess/charge according to the customs Tariff Act.
While complying with the objectives, before granting permission, customs ensure that the goods exported are of the same and the duty or cess duty thereon is properly determined and paid by the exporter.
Companies and consumers must satisfy a number of regulations before they may import goods. Import taxes may have to be paid, for example, and goods that are not safe may be banned. All goods that are imported from a third country first acquire the status of ‘goods in temporary storage’. The importer must declare how they will be treated or used and can then use one of the customs procedures.
Steps taken by Indian Customs for ensuring “Ease of Doing Business” Various trade facilitation measures have been taken by Indian Customs in recent times. Some of the major initiatives include:
Introduction of Revised Authorised Economic Programme(AEO)
As a further step towards trust based compliance, Indian Customs has introduced the new Authorised Economic Operator(AEO) Programme wherein extensive benefits, including greater facilitation and self certification, have been provided to those entities who have demonstrated strong internal control system and compliance with CBEC.
Setting Up of Customs Clearance Facilitation Committee (CCFC)
Customs Clearance Facilitation Committee (CCFC) has been set-up at every major Customs seaport and airport under the chairmanship of Chief Commissioner of Customs/Commissioner of Customs.
Amendments in Warehousing provisions for introducing record based controls
The department has made significant amendments in warehousing provisions to leverage the benefits of automation for facilitating trade and to enable the department to monitor the permitted period for which goods remain in the warehouse. The amended provisions provide a single point for the importer or owner to seek extension of the warehousing period and pay duties online.
Indian Customs Single Window Project
Online message exchange Indian Customs has introduced SWIFT (Single Window Interface for Facilitating Trade) for ensuring ease of doing business. Under Indian Customs Single Window Project, the importers electronically lodge their Customs clearance documents at a single point only with the Customs. Benefits of Single Window Scheme include:
a. Reduced cost of doing business;
b. Enhances transparency;
c. Integration of regulatory requirements at one common platform reduces duplicity and cost of compliance;
d. Optimal utilization of man power.
Reduction in mandatory documents for imports and exports
In order to simplify procedures to facilitate genuine trade, CBEC has reduced the number of mandatory documents and prescribed only three mandatory documents for general import/export. Packing list and commercial invoice has been merged into a single document for Customs purposes. Also SDF form required to be submitted along with shipping bill (export declaration) is no longer required. However, for import and export of special nature under preferential agreements etc, other documents may be required to be submitted by the importer/exports.
Adoption of Digital Signature
In order to encourage paper less working and dispense with the requirement of physical submission of documents ‘Digital Signature’ has been introduced for importers, exporters, airlines, shipping lines.
24×7 Customs Clearance
CBEC introduced the facility of 24×7 Customs clearance in the year 2012 for goods exported under free Shipping Bills and now been extended to all Bills of Entry at various sea ports and air cargo complexes.
Abolition of Mate Receipt
With the automation of Customs procedures, manual issuance of mate receipt for containerized cargo has become redundant .
Reducing/eliminating printouts in Customs Clearance
With the aim of “ease of doing business” and promoting paperless clearance, Board has decided to do away with routine print-outs of several documents e.g. GAR 7 Forms/ TR 6 Challans, TP copy, Exchange Control Copy of Bill of Entry and Shipping Bill, and Export Promotion copy of Shipping Bill.
Implementation of Import Data Processing and Management System (IDPMS)/ Export Dara Processing and Management System(EDPMS)
Import Data Processing and Management System (IDPMS)/ Export Dara Processing and Management System(EDPMS) have been jointly launched with RBI to facilitate efficient data processing for payment of imports/export collection and effective monitoring.
Email notification
Email notification service to importers for all important stages related to import clearances has been initiated.
Ease of doing business
Customs has made it mandatory to file a Bill of Entry on which the vessel or aircraft or vehicle carrying the goods arrives at a customs station at which goods are to be cleared for home consumption or warehousing. A late charge for delayed filing of bill of entry has also been prescribed. Importers now have to make payment of duty in the same day in case of self-assessed bill of entry and in case of re-assessment. Provision has also been made for refund of customs duty if paid in excess.
Streamlining of process of IGM amendment for import through sea
For streamlining and simplifying the process of IGM amendment in case of goods imported through sea route, Board has issued fresh guidelines for IGM amendment in order to ensure that all requests for amendment in IGM are followed and for minor amendments shall be decided administratively without levy of penalty.
EXPORT PROMOTION SCHEMES IN INDIA
India is still a developing country and a small country like Singapore is ahead of India. One of the major reasons for India’s poor export performance is its high cost of export products. Indian exporters are not able to sell the goods at a cheaper and competitive rate, which makes them uncompetitive in the global market. Indian products have high prices due to poor Infrastructure, associated costs, Interest rates. Therefore, the Govt. of India tries to compensate for the disadvantages that the Indian exporters face by introducing various Export Promotion Schemes/Export Incentives in India to remain competitive in the global market. Following are 18 (eighteen) promotion schemes/incentives the Govt. of India has introduced to compensate hurdles facing by the India exporters.
1. MEIS Scheme: This is designed to provide rewards to exporters to offset infrastructural inefficiencies and associated costs like payment of basic customs duty, additional duty, payment of central excise duty. MEIS was introduced in the Foreign Trade Policy (FTP) for the period 2015-2020.
2. RoDTEP Scheme: RoDTEP is a new scheme to replace the existing MEIS scheme for exports of goods from India,which aims to reimburse the taxes and duties incurred by exporters such as local taxes, coal cess, mandi tax, electricity duties and fuel used for transportation, which are not exempted or refunded under any other existing scheme.
3. SEIS Scheme- This reward scheme is to promote the export of services from India.SEIS Scheme was introduced on 1st April 2015 for 5 Years under the Foreign Trade Policy of India 2015-2020.
4. AAS Scheme- Advance License scheme was introduced to allow duty-free import of raw materials required for the production of export goods
5. DFIA Scheme- The purpose of this scheme is the same as the Advance License scheme i.e. to allow duty-free import of raw materials. However, unlike the AA, DFIA Scheme is a post-export scheme. It means that duty-free import is allowed only after the export is made.
6. DBK Scheme- It is a refund of the duties given by the Govt. In the DBK scheme, duties of customs & central excise that are chargeable on imported and indigenous materials used in the manufacture of exported goods are refunded back.
7. RoSCTL Scheme- The old RoSL scheme was replaced by the new RoSCTL Scheme from 07.03.2019.RoSCTL scheme is only applicable to the Apparels & made-up Industry .It gives a refund of State and Central Taxes and Levies such as VAT on transportation fuel, Captive Power, Mandi Tax, Electricity Duty. Etc.
8. EPCG Scheme- The objective of the EPCG Scheme is to facilitate the import of capital goods/machinery for producing quality goods and services and enhance India’s manufacturing competitiveness.
9. EOU/EHTP/STP/BTP Schemes- The major benefits of the EOU Scheme are – No Import duties while procuring raw materials or capital goods, faster custom clearance facilities, it can be set up anywhere in the country, unlike an SEZ unit.
10. GST Refund for Exporters / LUT Bond facility / 0.1% GST benefit for Merchant Exporters- Exporters are given a host of preferential facilities under the GST Act. They can make an export supply either “on payment of GST” or “without paying any GST” under the LUT bond facility.
11. TMA Scheme- This scheme is introduced only for the agricultural export products and it came into effect from 01.03.2019.
12. Deemed Export Benefits- The Objective of these benefits is to provide a level-playing field to the domestic manufacturers in certain specified situations
13. Star Export House / Status Holder Certificate- This is not a financial incentive scheme, but a kind of recognition/certification given by the Govt. of India to eligible exporters. Status holders are regarded as business leaders who have successfully contributed to India’s foreign trade.
14. MAI Scheme- The objective of this scheme is to play a catalytic role in promoting exports from India by exploring new markets and supporting all the export promotion activities in the new markets.
15. MDA Scheme- This is an old scheme that was merged into the new Market Access Initiative (MAI Scheme), 2018.
16. TEE Scheme- Towns exporting goods worth more than Rs. 750 Cr. And having high export potential are notified as Towns of export excellence (TEE).Financial assistance is provided to recognized associations in those towns as per the guidelines covered under the Market Access Initiative (MAI Scheme).
17. IES Scheme- IES which is also known as an Interest subvention scheme was introduced in April 2015, to provide pre and post-shipment export credit to exporters in rupees.
18. NIRVIK Scheme- It is primarily an insurance cover guarantee scheme that provides a cover of up to 90% of principal and interest as against the current credit guarantee of only up to 60% loss. The cover will include both the pre and post-shipment export credit.
Bibliography
Department of Revenue under the Ministry of Finance, Government of India. (2021, January 04). About CBIC. Retrieved from Central Board of Indirect Taxes and Customs : https://www.cbic.gov.in
Department of Revenue, Ministry of Finance, Government of India. (2021, January 05). About ED. Retrieved from Enforcement Directorate: https://www.enforcementdirectorate.gov.in/
Govenment of India. (2021, January 05). About ICA. Retrieved from Indain Council of Arbitration: http://www.icaindia.co.in
Goverment of India, Ministry of Finance. (2021, January 06). About Department of Revenue. Retrieved from Department of Revenue: https://dor.gov.in/
Goverment of India,Ministry of Commerce and Industry. (2021, January 03). About EPCs. Retrieved from Indian Trade Portal: https://www.indiantradeportal.in
Government of India, Ministry of Finance. (2021, January 02). About CCEA. Retrieved from Department of Economic Affairs: https://dea.gov.in/
Government of India,Minsitry of Finance. (2021, January 06). About Department of Economic Affairs. Retrieved from Department of Economic Affairs: https://dea.gov.in
Ministry of Commerce and Industry. (2021, January 04). About DGFT. Retrieved from Directorate General of Foreign Trade: https://www.dgft.gov.in
Ministry of Commerce, Government of India. (2021, January 06). About FIEO. Retrieved from Federation of Indian Export Organisations: https://www.fieo.org/
Reserve Bank of India. (2021, January 03). About RBI. Retrieved from Reserve Bank of India: https://www.rbi.org.in
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From: NC GOEL
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