UNIT 6 EXPORT PROMOTION MEASURES IN INDIA

Structure
6.0 Objectives
6.1 Introduction
6.2 Rationale for Philosophy of Export Promotion
6.3 Evolution of Export Promotion Policies in India
6.3.1 Policy Regarding FTAs
6.4 Organizations Involved in Export Promotion
6.5 Export Promotion Measures
6.6 Specific Agencies Set Up for Export Promotion (EOUs and SEZs)
6.6.1 Export Oriented Units (EOUs)
6.6.2 Special Economic Zones (SEZs)
6.7 Challenges Before Export Promotion
6.8 Strategies for Export Promotion
6.9 Let Us Sum Up
6.10 Key Words
6.11 Terminal Questions
References

6.0 OBJECTIVES
After going through this unit, you will be able to:

• explain the rationale behind objectives of export promotion;

• describe the evolution of export promotion policies in India;
• discuss the institutional infrastructure for export promotion in India;
• examine different measures of export promotion;
• highlight the operations of specific agencies like EOUs and SEZs for export promotion;
• analyse the challenges before export promotion;
• suggest strategy for export promotion.

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6.1 INTRODUCTION
Export plays a significant role in India’s economic development. For India, exports remain an
important engine of economic growth. There is optimism that exports can grow much faster,
especially in services, given the emphasis on digitisation across the globe. The government, too,
has been pushing the export growth agenda. To be a $5 trillion economy, India needs to have $1
trillion exports. To ensure the success of the ‘Make in India’ programme the scope of export
promotion should duly be emphasised. A number of institutions have been set up along with
various export promotion schemes to boost India’s export capabilities. The export and import
functions are looked after by the Department of Commerce (Ministry of Commerce and
Industry) which under the Foreign Trade (Development and Regulation) Act 1992 (FTDR Act)
formulates the export-import policies and programmes that give direction to the exports.
It is important to note that the contribution of exports can dramatically change, both positively
and negatively. External shocks, such as global economic slowdown, fluctuating valuation of
foreign currencies, and changes in policies by importing countries, amongst others, over which
India has no control.

In this unit, you will learn the process of exports which is viewed as a complex affair and the
rationale behind working of export promotion activities. Various organisations, specific agencies
like EOUs and SEZs and measures taken for export promotion have also been analysed. In the
end an overview of challenges and export strategy has been given for strengthening export
promotion measures.

6.2 RATIONALE FOR PHILOSOPHY OF EXPORT PROMOTION

Export promotion means to promote products and services in foreign markets. The term export
promotion encompasses a large set of policy interventions, ranging from exchange rate policies
to any ‘specific measures that generally amount to the government bearing a portion of the
private cost of production of export’. In general, export promotion involve all the measures and
programmes aimed at assisting current and potential exporters. These measures may be
addressed to either national exporters or multinational enterprises producing locally (or both).
Yet, in the recent decades the set of policies and measures available to governments to influence

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exporting has been gradually restricted by the WTO. For instance, the use of selective export
subsidies is now severely limited for most countries (Belloc and Maio, 2012).

The need to exploring export avenues and building up domestic supply capabilities for the
purpose received greater stress particularly after 1991. As per WITS, India’s exports of goods
and services as a percentage of GDP is 18.43 percent in 2021. This means there is scope for
enhancing export from India, but certain factors have to be in tandem for achieving sustainable
export-led growth.

Export business requires special knowledge and business acumen. Exporters need guidance and
assistance at different stages of the export effort. Export promotion is now seen as an important
policy for economic growth. Various measures are being adopted by the government to promote
export competitiveness. Rationale of export promotion measures and institutions are manifold.
They are as under:

(i) Motivate organizations to export as increased exports will add to employment in

the country,
(ii) Export will be a source for earning foreign exchange,
(iii) Sell surplus production particularly agricultural commodities,
(iv) Offer the opportunity for local firms to attain economies of scale,
(v) Boosting exports contribute to promote innovation and transfer of technology,
(vi) Financing of imports,
(vii) Acquiring knowledge of management from export destinations,
(viii) Correct unfavorable balance of trade,
(ix) Achieve the objective of self-reliance,

The support from exports is essential for attaining higher sustainable economic growth and make
India important in a relatively short period. It can also lead to a more robust development of
knowledge and talent hubs (Dewan, 2022). India should focus on pushing exports rather than
containing imports. To push exports, Indian firms will need to get into global value chains,
which is difficult because of high tariff in India.

The elimination of all procedural hurdles in the way of exports was also regarded as an important
adjunct of an effective export promotion effort. It is important to remember that export

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promotion policies cannot coexist with a protectionist regime. In India, export promotion has
incentive programs designed to draw more companies into exporting. Promotion of exports
should be through strategic policy interventions, extending appropriate export incentives
schemes that are compliant with international trade policies. It should be further supported by a
robust and efficient logistics infrastructure which is imperative to achieve the desired level of
exports growth and attain competitiveness in the global market.

6.3 EVOLUTION OF EXPORT PROMOTION POLICIES IN INDIA

Export promotion policies have been widely used by most countries around the world for a long
time. In India for the first time a 5-year Export Import Policy (EXIM) was introduced on 1st
April, 1992. Whilst the trade policies during 1950s and 1960s were designed to lay emphasis on
self-reliance and self sufficiency of the country. The policies during (and post) 1970s were
driven by the objectives of export led growth and increased efficiency and competitiveness. In
the year 1962, Mudaliar Committee on EXIM Policy reviewed the previous export import
policies of the Government. Initially, the EXIM Policy was introduced for the period of three
years with main objective to boost the export business in India. The trade policy, however during
this period was of a restrictive sort. In this context, the year 1991 is considered as a ‘watershed’.
After 1991, the country evidenced massive trade liberalization measures and departed from the
prevalent protectionist trade policies.

For the sake of understanding, it would be convenient to divide India’s trade policies into the
following three phases:

(i) Import Restriction and Import Substitution: during 1950’s to 1970s

(ii) Export Promotion & Import Liberalization: during 1970s to 1980s
(iii) Outward Orientation: From 1990 onwards.

Phases I and II can be considered as the Pre Reform Period, and Phase III as the Post Reform
Period. Following can be considered as the areas of major focus of the foreign trade policies in
the pre reform era:

(i) Import Substitution

(ii) Simplification of Import Licensing

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 (iii) Export Promotion
(iv) Focus on Exports as Catalysts for Growth
(v) Financial assistance to exporters
(vi) Simplification of procedural formalities
(vii) Minimization of the role of quantitative restrictions and reducing the tariff
rates substantially
(viii) Import Liberalization
(ix) Setting up of Export Processing Zones to push up exports

The salient features of trade policies in the third phase of reform (Post 1990s) are the following:

(i) Freer Imports and exports

(ii) Rationalization of tariff structure
(iii) Decanalisation
(iv) Devaluation and convertibility of Rupee on current account
(v) Trading houses
(vi) EOU Scheme
(vii) Special Economic Zones (SEZs)
(viii) Agriculture Export Zones (Agri- Export Zones)
(ix) Market access initiative scheme
(x) Focus on service exports
(xi) Concessions and exemptions

With the process of liberalization, the new trade policy brought about paradigm shifts in trade
openness of the country. The openness however changed the orientation from being ‘inward’ to
‘outward’. The new trade policy managed to give a tremendous boost to the exports of the
country, the policy was export friendly in nature. The FTP (2015-20) aims to make India a
significant participant in the world trade by striving to increase the export of goods and services
from $465.9 billion in 2013-14 to $ 900 billion by 2019-2020.

The new slogan of “self-reliance” or “aatmanirbharta” was also interpreted as a desire to reduce
possible external dependencies built up by trade. The tendency to describe trade restrictions in
favour of “aatmanirbharta” reflects a new, across-the-board, “self-reliance” policy.

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6.3.1 Policy Regarding FTAs
One way to grow India’s exports faster and cover more area is free trade agreements (FTAs).
Signing of FTAs will be of help in reducing complexities of trade and business. In the
contemporary scenario FTAs have become very common to promote trade. They reduce tariffs
and give market access and also bring down non-tariff barriers such as administrative fees,
labelling requirements, anti-dumping duties and countervailing measures. It is important to note
that India has signed FTAs with the UAE and Australia and is negotiating with the UK, GCC and
Canada. Though FTAs may not necessarily help the trade balance immediately, they help in
streamlining policies. For increasing merchandise and services exports, India must adopt
proactive policies to capitalise on our exports potential, explore new markets and avoid
protectionism and inverted duty structures which may give relief to domestic industries but will
affect India’s overall competitiveness (Sahoo and Mujtaba, 2022).

India is not new to free trade agreements (FTAs) and as of 2022 India has been focusing on
complementary economies and not competing ones. This change in the FTA strategy will help
India get better trade deals as India is not competing with these countries and they are major
markets for exports. The inclusion of the services sector in such FTAs will give India an edge.
Services sectors such as transportation, legal services accounting services etc. can be opened up.

India’s experience is that a individual FTAs have a limited effect on export competitiveness. a
strategic ‘noodle bowl’ of FTAs could enable a country to create trade flows and climb higher on
the value chain. The focus of FTAs should be on creating these network effects, and not on item
or country-wise tariffs or a specified comparative advantage (Jain, 2022).

India’s FTA with Australia is unique in the sense that it would be the first FTA where the partner
country has agreed to eliminate import duties on all products exported from India. In contrast,
India will cut duties on about 70 percent of product lines. This agreement will significantly
accelerate bilateral trade between the two countries, and one can see it doubling to $50 billion
and beyond in the next few years (Mehta, 2022).

Importance of Gulf for India: India shares good relations with most of the countries in the Gulf.
The most important reasons for India’s relations with Gulf countries have been shaped by energy
needs, trade, and remittances from NRIs working there. The GCC has emerged as a major

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trading partner for India and huge potential is there for increasing investments also between the
two regions. The trade relation is bound to grow in the coming years. The essence of regional
economic agreements is that member countries agree to lower trade barriers between themselves
and not raise them (Roy, 2022).
An FTA ensures increased trade cooperation and lower duties. Additionally, the inclusion of
new-age areas like digital trade in FTAs is a welcome step since digital technology continues to
disrupt and transform GVCs by lowering entry barriers, increasing transparency, and facilitating
collaborative networks. India’s ongoing and future FTA negotiations must focus on securing
greater market access for domestic goods and services. At the same time, it should also focus on
better trade terms for high quality imports from partner countries and transfer of technology. The
capital goods content in imports of major exported economies is much higher than that of India
(Jain, et al, 2022).

Check Your Progress A

1. Why is export required?

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2. How is an export engine of growth? Give three reasons.

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3. What is the rationale for export promotion in India? Highlight five reasons.

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 4. What is trade policy?

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5. How do FTPs promote exports of India?

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6.4 ORGANIZATIONS INVOLVED IN EXPORT PROMOTION

The long-term vision is to make India a major player in the world trade. This requires
organizations commensurate with India’s efforts to promote exports. In view of the widely
diversifying nature of the export markets in different parts of the world and an equally diverse
and varied nature of products and services traded in international market, Government of India
have established specialised institutions at production/industry level for assisting exporters from
different sectors which have been given below.

Board of Trade (BoT): This is an advisory body which was reconstituted on 23rd March 2016.
The objective of BoT is to have continuous discussion and consultation with trade and industry
and advice the Government on policy measures related to Foreign Trade Policy in order to
achieve the objective of boosting India’s trade.

Institutions engaged in export efforts fall in six distinct tiers:

I. The first and foremost organisation is the Department of Commerce of the

Ministry of Commerce and Industry itself as it performs all the activities related
to foreign trade of India. For conducting various activities relating to foreign trade
the Department is functionally organized into 8 divisions. This is evident from the
following:

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 (a) The Department formulates, implements and monitors the Foreign
Trade Policy (FTP) which provides the basic framework and strategy
to be followed.
(b) Entrusted with responsibilities relating to multilateral and bilateral
commercial relations, Special Economic Zones, state trading, export
promotion and trade facilitation, and development and regulation of
certain export-oriented industries and commodities.
(c) Department of Commerce (DoC) is now actively engaging with State
Governments for promoting exports. DoC has advised State
Governments to constitute State Export Promotion Committees for
overseeing the formulation and implementation of State Export
Promotion Strategies in consultation with Export Promotion Councils
and FIEO.

The Ministry has attached offices as well such as:

(i) Directorate General of Foreign Trade (DGFT): Right from its inception till 1991,
this organization has been essentially involved in the regulation and promotion of
foreign trade. But now DGFT has also been assigned the role of a “facilitator”. Regional
offices of DGFT provide facilitation to exporters in regard to developments in
International Trade i.e. WTO Agreements, Rules of Origin and anti-dumping issues etc.
in their import and export decisions in the international dynamic environment.

(j) Directorate General of Trade Remedies (DGTR): (earlier known as Directorate

General of Anti-Dumping & Allied Duties). The DGTR is a professionally integrated
organization with multi-spectrum skill sets. The DGTR is a quasi-judicial body that
independently undertakes investigations. It is the single national authority for
administering all trade remedial measures including anti-dumping, countervailing duties
and safeguard measures. It also provides trade defence support to domestic industry and
exporters in dealing with instances of trade remedy investigations instituted against
them by other countries.

There are a few subordinate offices such as:

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(i) Directorate General of Commercial Intelligence and Statistics (DGCI & S): DGCI
& S is the premier organization for collection, compilation and dissemination of India’s
trade statistics. It provides trade statistics and various types of commercial information
required by the policy makers, researchers, importers, exporters, traders as well as
overseas buyers.
(ii) Offices of Development Commissioners of Special Economic Zones (SEZs) is
administered as per the SEZ Act, 2005 and SEZ Rules, 2006.

II. There are Deliberate and Consultative Organisations to ensure that export
problems are comprehensively dealt with after mutual discussions between the
Government and the Industry.

III. There are commodity specific organisations which deal with problems relating to
individual commodities and/or groups of commodities. Commodity Boards have
been set up as a separate organization to promote the export of commodities. The
functions and objectives of Commodity Boards are:

(i) Advising the government on policy matters.

(ii) Undertaking promotional activities.
(iii) Promoting the consumption of commodities in their jurisdiction by
opening branch offices in foreign countries.
(iv) Resolving all problems relating to commodities in their jurisdiction.
(v) Undertaking research activities to develop production and marketing
activities within the country.
(vi) Imparting training to workers engaged in the production of the
commodity concerned.

The Government of India has established six commodity Boards:

(i) Coffee Board was established under the Coffee Act of 1942. Head
Office in Bengaluru.

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 (ii) Tea Board was established under the Tea Act of 1955. Head Office is
located in Kolkata.
(iii) Rubber Board established under the Rubber Act of 1947.
Headquarters is located at Kottayam in Kerala.
(iv) Central Silk Board was established in 1949 under the Central Silk
Board Act. It functions under the administrative control of
the Ministry of Textiles, having head quarter at Bengaluru.
(v) Tobacco Board was established under the Tobacco Act of 1975.
Headquarter is at Guntur in Andhra Pradesh.
(vi) Spices Board was established under the Spices Act of 1986. Head
office at Kochi in Kerala.
The Marine Products Export Development Authority (MPEDA) instituted with a
mandate of developing a conducive ecosystem for marine products in the country
and promotion of its export from India. Its headquarters is at Kochi.

Agricultural and Processed Food Products Export Development Authority

(APEDA) was established in 1985. The primary objective of APEDA is to undertake
the development and promotion of export of 14 agricultural and processed food
products. APEDA has its headquarters at New Delhi.

Export Promotion Councils (EPCs) was established in 1965 are government-

initiated authorities that promote and support export firms in developing their
overseas trade for different products, offers services of export promotion such as
price, quality, packing, marketing, transport etc. They conduct market surveys,
publish reports on foreign trade, administer various export promotion schemes, and
develop trade contacts, quality control, joint participation in trade fairs and
exhibitions. At present, there are following fourteen EPCs which are also recognized
as registering authorities for exporters.

(i) Basic Chemicals, Cosmetics & Dyes Export Promotion Council

(CHEMEXCIL) established in 1963.
(ii) Chemicals & Allied products Export Promotion Council (CAPEXIL):
CAPEXIL was set up in 1958.

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(iii) Council for Leather Exports (CLE): This was set up in July 1984. It
serves as a bridge between member-exporters and buyers all over the
world.
(iv) Engineering Export Promotion Council of India (EEPC): This has been
serving its ever-growing strength of over 12000 members.
(v) Plastic Export Promotion Council (PEPC) was established in 1955 with
the aim of promoting the exports of plastics and linoleum products from
India.
(vi) Sports Goods Export Promotion Council (SGEPC): This was established
in the year 1958 with an objective to promote exports of sports goods and
toys.
(vii) Shellac and Forest Products Export Promotion Council (SHEFEXIL) was
founded in June 1957. The Council is presently entrusted with the export
promotion activities of the following products: Shellac and lac based
products, vegetable saps and extracts of herbs, guar gum, plant and plant
portion (Herbs), fixed vegetable, oil cake and others, other vegetable
materials, multi products belonging to the north eastern region.
(viii) Pharmaceuticals Export Promotion Council of India (PHARMEXCIL)
was established in 2004.
(ix) Services Export Promotion Council (SEPC) is an apex trade body set up
in 2006 to facilitate services exporters of India.
(x) Project EPC: Project EPC acts as an apex coordinating agency for the
Indian project exporters to secure, facilitate and execute projects in line
with the guidelines prescribed by the Reserve Bank of India for
undertaking overseas projects.
(xi) Export Promotion Council for EOUs and SEZ Units has been set up in
January 2003 to service the export promotional needs of 100 percent
Export Oriented Units (EOUs), Special Economic Zone (SEZ) Units and
SEZ Developers in the country.

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 (xii) Indian Oilseeds & Produce Export Promotion Council (IOPEPC) is
concerned with the Development and export promotion of Oilseeds, Oil
and Oilcakes. It was formed on 23rd June 1956.
(xiii) Cashew Export Promotion Council of India (CEPCI): To encourage the
export of cashew kernels, cashew nut shell liquid and allied products
from India was established in 17th August 1955.
(xiv) Gem and Jewellery Export Promotion Council (GJEPC) is among India’s
leading foreign exchange earning sectors. It has approximately 6700
members as on November 2021.

IV. Consists of service institutions which facilitate and assist the exporters to expand their
operations and reach out more effectively to the world markets. Export marketing
effort at the individual corporate level also needs to be reinforced through a number
of technical and specialised service inputs. These cover important and crucial areas
like packaging, quality control, risk coverage, promotion, finance and academic
institutes.

(i) Indian Institute of Packaging (IIP): Established in 1966 and headquartered at

Mumbai. The Institute is engaged in various activities including mandatory
UN Certification of packaging for transport of hazardous/dangerous goods,
training, education, consultancy, projects and research and development in
the area of packaging.
(ii) Export Inspection Council (EIC): The council was established in 1963 to
ensure quality control and pre shipment inspection and for matters
connected thereof. The EIC has adopted Quality Management System and is
ISO 9001:2015 certified to ensure realization of its objectives located at
New Delhi.
(iii) Export Credit and Guarantee Corporation Ltd (ECGC): This is a premier
export credit agency and was set up in 1957 in Mumbai, to provide export
credit insurance services.
(iv) National Export Insurance Account Trust (NEIA): Established in 2006 to
promote project exports from India that are of strategic and national

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 importance. Successful project exports enable sustained visible impact on
India’s capacity in executing projects abroad.
(v) EXIM Bank is a specialized financial institution wholly owned by the
Government of India with presence in Indian and foreign cities around the
world and was set up in 198. The purpose of the bank is financing,
facilitating and promoting India’s international trade. EXIM Bank offer a
range of financing programmes to enhance the export-competitiveness of
Indian companies. It provides support to export-oriented units by catering to
long-term loan requirements that help exporters finance new projects,
expand, modernize or purchase new equipment or carry out R&D; and cater
to their working capital and overseas investment requirements.
(vi) India Trade Promotion Organization (ITPO): ITPO was formed in the year
1976. This is a premier trade promotion agency of India providing a broad
spectrum of services to trade, industry and acting as a catalyst for growth of
India’s trade. ITPO is engaged in providing services pertaining to
promotion/ facilitation of trade by organizing/ participating in trade fairs in
India and abroad thereby increasing India’s exports.
(vii) Government e-Marketplace: A special purpose vehicle (GeM-SPV) created
as the National Public Procurement Portal for providing procurement of
goods and services required by Central and State Government organizations.
(viii) Indian Council of Arbitration (ICA) is the leader in dispute resolution
services in India was established in 1965, based in New Delhi. The main
objective of ICA is to promote amicable, quick and inexpensive settlement
of commercial disputes by means of arbitration, conciliation, regardless of
location.
(ix) Federation of Indian Export Organisations (FIEO): This was set up in 1965
as an Apex Body of the export promotion organisations. It has been
designated as registering authority for status holder exporting firms and
other exporters dealing in multi-products.

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 (x) Indian Diamond Institute (IDI) was established in 1978 with a focus to
provide a vocational education in the field of Diamond, Gems and
Jewellery.
(xi) The Footwear Design and Development Institute (FDDI) was set-up in the
year 1986 with an objective to provide skilled manpower and technical
services to the leather and footwear industry.
(xii) The Price Stabilisation Fund Trust was registered on 11th September 2003
as a Public Trust to implement the Price Stabilization Fund scheme to
alleviate the hardships faced by the growers of coffee, tea, rubber and
tobacco due to continued low prices of these commodities.
(xiii) The India Brand Equity Foundation (IBEF) is a Trust whose primary
objective is to promote and create international awareness of Brand India in
overseas markets and to facilitate dissemination of knowledge about Indian
products and services. Towards this objective, IBEF works closely with
stakeholders across government and industry.
(xiv) Indian Institute of Foreign Trade (IIFT) was set up on 2nd May 1963 as an
autonomous Institution with a focus on foreign trade related research and
training. In recognition of its all-round achievements, the Institute was given
the status of “Deemed to be University” in May 2002 by University Grants
Commission (UGC).
(xv) National Institute of Fashion Technology (NIFT) was tset up in 1986. NIFT
is the pioneering institute of fashion education in the country providing
professional human resource to the textile and apparel industry. Over the
years NIFT has also been working as a knowledge service provider to the
Union and State governments in the area of design development and
positioning of handlooms and handicrafts.

V. Includes government trading organisations specifically set up to handle export/import

of specified commodities and to supplement the efforts of the private enterprise in the
field of export promotion and import management.

Public Sector Undertakings (PSUs)

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(i) State Trading Corporation of India Limited (STC): STC was set up on 18th
May 1956. STC has stopped undertaking business activity due to
administrative reasons.
(ii) MMTC Limited: MMTC was incorporated in 1963 primarily to regulate the
international trade of minerals and metals. Over the years, MMTC
diversified its business portfolio keeping in view national requirements /
new business opportunities and new product lines like agro commodities,
fertilizers, precious metals, coal were added to the product profile of
MMTC.
Besides acting as a canalizing agency for iron ore, manganese ore, chrome
ore/concentrate, MMTC functions as one of the nominated agencies for
import of gold & silver and urea, besides trading in other commodities.
MMTC Transnational Pte. Ltd. (MTPL) Singapore is a wholly owned
subsidiary company of MMTC and was incorporated in October 1994. Since
inception, the company has been engaged in commodity trading and has
established itself as a credible and reputable trading company in Singapore.
(iii) PEC Limited: PEC was incorporated as a subsidiary company of State
Trading Corporation in 1971. Its main functions include export of
engineering equipment and projects, import of bullion and trading in
industrial raw material and agro commodities.

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 VI. The sixth tier constitutes agencies for export promotion at the State level. Trade
Promotion Council of India was established on July 3, 2015, to ensure a continuous
dialogue with State Governments and UTs. The dialogues are on the measures to
provide an international trade enabling environment in the States, as well as to
develop a framework for making the States active partners in increasing India's
exports.

Some of the State Governments have set up specialized Export Trade Corporations
which undertake export promotion. They are established in Andhra Pradesh, Bihar,
Karnataka, Uttar Pradesh, Madhya Pradesh, Himachal Pradesh. There are also
Advisory Councils like Board of Trade, Export-Import Advisory Council, etc.

Trade Representatives Abroad -There are trade representatives abroad who conduct market
surveys, furnish information on exports-imports, settle trade disputes and pass on information
about the rules and regulations for imports.

6.5 EXPORT PROMOTION MEASURES

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Export promotion measures (EPMs) are a set of measures and practices aimed at directly or
indirectly supporting export. Export promotion programs are government-funded or subsidized
public policy, attempts to increase the total value of export sales of business firms. Export
promotion is pervasive in developed as well as in developing countries. It covers a vast array of
policy interventions ranging from public goods provision to exchange rate policies, from
financial assistance to marketing and advertising services. The export promotion system in India
has been the result of a long process of evolution initiated mainly during 1960s when a number
of export promotion measures have been introduced. These measures try to compensate for the
disadvantages that the Indian exporters face and to make them competitive in the global market.
Following are promotion schemes/incentives introduced in India (Ghosh, 2021):

1. Merchandise Exports from India Scheme (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, and payment of central
excise duty. MEIS was introduced in the Foreign Trade Policy (FTP) for the period
2015-2020.

2. Rebate of Duties & Taxes on Export Products (RoDTEP) Scheme: RoDTEP is a new
scheme to replace the existing MEIS scheme for exports of goods from India. The
scheme 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. Service Export from India Scheme (SEIS): 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. Advance Authorisation Scheme AAS Scheme: Advance License scheme was

introduced to allow duty-free import of raw materials required for the production of
export goods.

5. Duty-free Import Authorisation 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.

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6. Duty Drawback Scheme DBK Scheme- It is a refund of the duties given by the
Government. 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. Scheme for Rebate on State and Central Taxes and Levies 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. Export Promotion Capital Goods Scheme 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. Transport and Marketing Assistance Scheme 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 Government of India to
eligible exporters. Status holders are regarded as business leaders who have
successfully contributed to India’s foreign trade.

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 14. Market Access Initiative 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. Market Development Assistance MDA Scheme: This is an old scheme that was
merged into the new Market Access Initiative (MAI Scheme), 2018.

16. Towns of Export Excellence 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. Interest Equalization scheme IES Scheme: IES which is also known as an interest
subvention scheme was introduced in April 2015. It provides 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 up to 90 percent 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.

All the above measures can broadly be specified into four categories:

(i) Incentives and assistance for promoting production for exports.

(ii) Fiscal incentives

(iii) Financial incentives

(iv) Direct assistance in export marketing operations.

Government is encouraging and promoting Indian exports and initiate suitable interventions from
time to time. Incentive structures were put in place to ensure higher relative profitability of
exports compared to the rest of the sectors. As much as 70 percent of India’s exports target 30
percent of world trade comprising items with a declining global share. The need is to promote
India’s domestic manufacturing industry to drive exports and growth (Kant, 2021).

20
The production linked incentive (PLI) scheme which first came up in 2020 will play a significant
role in enhancing manufacturing and boosting exports in 15 product sectors. It aims at making
India a major production centre for these products. While incentivising domestic production
through various initiatives under Atmanirbhar Bharat to enhance export potential, it is important
that global quality benchmarks are put in place for new capacities to be created in identified
sectors under the PLI scheme (Jain, et al, 2022).

The government is implementing its Districts as Export Hubs scheme and it is expected that the
number of firms doing commercial export transactions will go up from an estimated 100,000 to
500,000 by 2025. The government has issued Quality Control Orders (QCOs) and Technical
Regulations (TRs) for electronics, safety glasses, toys, microwaves, tyres, LCDs, CFLs, etc.
Quality consciousness will help Indian products match global standards and succeed overseas.

The government is working to diversify exports through a push in 12 service sectors under its
Champion Services Sector initiative. Important new thrust sectors are tourism and hospitality,
medical value travel, audio-visual, legal, communication, construction and related engineering,
environmental, financial and education services.

The proactive policy schemes by the government have helped the export sector. Schemes like the
gold card scheme and interest equalisation scheme by RBI and the market access initiative by the
export promotion councils are also useful (Sahoo and Mujtaba, 2022).

All along, a piecemeal approach has been followed to introduce any new measure or modify the
existing ones. The efficacy of various export promotion measures has to be judged in the light of
their contribution. The contribution should be export expansion and diversification process,
solution of various export marketing problems and facilitation of export marketing operations.
These activities should be with reference to the fast changing international marketing situation in
the target markets as well as marketing capabilities of competing sources of supply (Pandey,
2016).

21
6.6 SPECIFIC AGENCIES SETUP FOR EXPORT PROMOTION (EOUS AND EZS)
Foreign trade policies and other schemes provide promotional measures to boost India’s exports
with the objective to offset infrastructural inefficiencies and associated costs involved to provide
exporters a level playing field. India needs such agencies for facilitating trade, processes for
exports and imports and logistics that reduce trade and transaction costs. It also ensures
reliability and timely delivery, which is important to becoming part of GVCs (Sahoo and
Mujtaba, 2022). In this context, the government has initiated agencies like EOUs, EPZs and
SEZs for export promotion.

6.6.1 Export-Oriented Units (EOUs)

Units that are undertaking to export their entire production of goods are known as export
oriented units (EOUs). The EOUs scheme was introduced in 1981 to boost exports, increase
earnings of foreign exchange and generate employment in the country. It adopts the same
production regime but offers a wide option in locations. These options are: source of raw
materials, ports of export, hinterland facilities, availability of technological skills, existence of an
industrial base and the need for a larger area of land for the project. It was meant to be a
complementary scheme to the FTZs/EPZs introduced in the sixties. It adopts the same production
regime as SEZs (erstwhile EPZs) but offers a wide option in locations. As on 30th September
2021, 1650 units are in operation under the EOU Scheme.

EOUs project must have a minimum investment of Rs.1 crore in plant and machinery. This
condition does not apply for software technology parks, electronics hardware technology parks
and biotechnology parks. Further, EOUs involved in handicrafts, agriculture, animal husbandry,
information technology, services, brass hardware and handmade jewellery does not have any
minimum investment criteria. EOUs are required to export 100 percent of their products unless
they sell a portion of it to domestic tariff area (DTA). EOUs are licensed to manufacture goods
and export within a bonded period of five years.

Initially, EOUs were mainly concentrated in textiles and yarn, food processing, electronics,
chemicals, plastics, granites and minerals/ores. But as of 2022, EOUs have extended their areas

22
of work. These include manufacturing, servicing, development of software, trading, repair,
remaking, reconditioning, re-engineering including making of gold/silver/platinum jewellery and
articles thereof, agriculture including agro-processing, aquaculture, animal husbandry, bio-
technology, floriculture, horticulture, pisiculture, viticulture, poultry, sericulture and granites.

Features of EOUs: Following are special features of EOUs:

(i) Have the facilities to procure raw material or capital goods duty-free, either
through import or through domestic sources;
(ii) Eligible for reimbursement of GST;
(iii) Allowed to avail fast track clearance facilities;
(iv) Exempted from industrial licensing for the manufacture of items reserved for SSI
sector;
(v) The location of an EOU should be at least 25 kilometres from standard urban
area limits unless it is set up in an industrial area or deals in a non-polluting
product or service. EOUs gave exporters the freedom of setting up an export
business in places of their choice, unlike FTZs and EPZs, which have specific
locational restrictions. EOUs have a wide range of industrial sectors to choose
from while setting up their export-oriented units;
(vi) Special licence is required for setting up an EOU for sectors like weapons and
defence equipment, atomic, narcotics, psychotropic substances, and certain
alcoholic and tobacco-related products;
(vii) A supplier must charge GST on goods supplied to the EOU. For its part, the
EOU can either apply for an input tax credit on the GST paid while providing
supplies to the DTA or claim a refund of the GST. It must be noted that GST is
applicable even in case of sales from one EOU to another, as such a transaction
is considered a regular sale for the purpose of the GST law.
(viii) Notably, primary customs duty is exempted for an EOU in case of imports.

The positive effect of the EOU scheme was prominent in the first two decades of its existence
until the floating of the SEZ scheme. During 2020-21 exports of EOUs amount to Rs. 1,10,625
Crore.

23
6.6.2 Special Economic Zones (SEZs)

EPZs are special enclaves, separated from the domestic tariff area (DTA) by fiscal barriers and
are intended to provide an internationally competitive duty free environment for export
production at low cost. India was one of the first in Asia to recognize the effectiveness of the
Export Processing Zones (EPZs) model in promoting exports, with Asia’s first EPZ set up in
Kandla in 1965. Seven more zones were set up thereafter. EPZs were setup to promote export by
providing various incentives, like infrastructural services and tax holidays.

The EXIM Policy, 2000 launched a new scheme of Special Economic Zones (SEZs). Under this
scheme, all the 8 pre-existing EPZs were converted into SEZs, located at Kandla and Surat
(Gujarat), Santa Cruz (Maharashtra), Cochin (Kerala), Chennai (Tamil Nadu), Visakhapatnam
(Andhra Pradesh), Falta (West Bengal) and Noida (Uttar Pradesh). Though EPZs have been a
feature of Indian policy since 1960, they have been much less successful than in ASEAN &
China.

Special Economic Zones (SEZs) should be viewed as a vehicle for introducing policy and
institutional reform. According to Ministry of Commerce & Industry (Press release of January
12, 2023), while correcting the shortcomings of the EPZ model, some new features were
incorporated in the SEZs Policy announced in April 2000. This policy supported by quality
infrastructure complemented by an attractive fiscal package, both at the Centre and the State
level, with the minimum possible regulations. The salient features of the SEZ scheme are:-

(i) A designated duty free enclave to be treated as foreign territory only for trade
operations and duties and tariffs.
(ii) No licence required for import.
(iii) Manufacturing or service activities allowed.
(iv) SEZ units to be positive net foreign exchange earner within three years.
(v) Duty free import/domestic procurement of goods for development.
(vi) 100 percent income tax exemption on export income for SEZ units under
Section 10AA of the income tax Act for first 5 years, 50 percent for next 5

24
 years thereafter and 50 percent of the ploughed back export profit for next 5
years.
(vii) Exemption from Central Sales Tax, exemption from Service Tax and single
window clearance mechanism for establishment of units.
(viii) Domestic sales subject to full customs duty and import policy in force.
(ix) Full freedom for subcontracting.
(x) No routine examination by customs authorities of export/import cargo.

In addition to these above features, the important aspects of SEZs are:

(i) Land Requirement for SEZs and details of Land under SEZs,
(ii) Procedure for setting up of Special Economic Zone,
(iii) Fiscal benefits and duty concession offered to SEZ developers and units,
(iv) Recent Initiatives for ensuring Ease of Doing Business in SEZs.

Indian SEZs, unlike Chinese SEZs, are not having geographical advantage. The Indian SEZs
cannot be compared with Chinese SEZs, in respect of their size, the type of industries or even the
economy of the country. This is because merely demarcating a piece of acreage and calling it a
SEZ is not going to solve the problem. What would spur investment in these zones is action
matching the words and infrastructure matching expectations of the investors (Pazhayathodi,
2003).

Performance of SEZs: After notification of SEZ Rules in February 2006, Department of

Commerce has granted 425 formal approvals for setting up SEZs, out of which 358 have been
notified. The performance of SEZs can be analysed under the following heads (Annual Report
2021-22):

(i) Employment generation out of the total employment provided to 25,60,286

persons in SEZs as a whole, 24,25,582 is incremental employment generated after
February 2006. This is apart from millions of man days of employment generated
by the developers for infrastructure activities.
(ii) Physical exports from the SEZs have been reported to Rs. 7,59,524 crore in 2020-
21. There has been overall growth of export of 3,225% over past sixteen years

25
 (2005-06 to 2020-21). The exports from SEZs have been significantly higher than
the overall export growth of the country.
(iii) The total investment in SEZs till 30th September 2021 is Rs. 6,28,565.89 crore,
including Rs. 5,92,845.46 crore in the newly notified SEZs set up after SEZ Act,
2005. 100% FDI is allowed in SEZs through automatic route.

In addition to earning of foreign exchange and development of infrastructure, SEZs have

achieved significant local area impact in terms of direct as well as indirect employment,
emergence of new activities, changes in consumption pattern and social life.

Strengthening of SEZs: Concrete measures have to be taken to put the policies into practice.
India should learn from its own earlier EPZ experience which has been characterized by poor
infrastructure, lack of objective clarity, centralized management structure and absence of
linkages with the domestic economy. It is suggested that greater delegation of power to local
authorities is necessary for the success of SEZs. SEZs can survive only based on their uniqueness
and attractiveness.

The revamped SEZs is in the process of formulation to be called Development of Enterprise and
Service Hubs (DESH). The DESH aims to re-visit the SEZ Policy and thereby boost exports.
This is indeed futuristic and are expected to give a leg-up to the export sector. It is aimed at
addressing the skewed profile of India’s existing SEZs, offer stable, predictable and transparent
fiscal regime, attract large scale foreign investments, generate employment and leverage foreign
trade as a catalyst for India’s industrial transformation. Development hubs will be allowed to sell
outside the demarcated area or in the domestic market, with duties only to be paid on the
imported inputs and raw materials instead of the final products. The DESH must identify the
sectors of opportunities for global trade which are engineering, electronic and electrical
automobiles, pharmaceuticals and plastics (Singh and Singh, 2022).

Singh and Singh (2022) have cautioned that the proposed DESH should not become another
policy document but a means to make India among the five top exporters of the world. The
DESH should work on twin-objectives of substituting imports and stimulating exports. The
DESH must be in sync with the existing scheme MOOWR/ EOUs/DTA to reduce policy induced
distortions.

26
Check Your Progress A

1. Name five trade promoting organisations.

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2. Explain the following briefly:

(a) Board of Trade

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(b) Export House

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(c) FTAs

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(d) Department of Commerce

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(e) DGFT

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 3. Classify broadly measures of export promotion into four categories.

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4. What is commodity boards?

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5. Write three financial measures are available to exporters?

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6. Write few sentences about each of the following:

(a) EOUs

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(b) SEZs

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6.7 CHALLENGES BEFORE EXPORT PROMOTION

India hopes to triple its exports to $1 trillion by 2025. Multiple factors are preventing Indian
exporters from reaching their full potential and making them less competitive in the global
market. The important fact is that India’s exports policy is somewhat fragmented and do not take
into account certain ground realities. Many of the difficulties exporters face have been around for

28
years. Unless these are properly addressed, it would be difficult for India to reach its full export
potential. These challenges are as under:

(i) Inadequate infrastructure: Infrastructure extends to multiple sectors, but for

international trade, it is transport infrastructure that is the most important. India’s
inadequate transport infrastructure poses many problems to exporters, some of
which are:

a. Congested ports and roads

b. Lack of connectivity
c. Outdated rail equipment
d. Supply chain disruption
e. Poor R&D infrastructure to promote complex and unique exports.

Given this situation, the unit cost of a container of exports is significantly higher for
India compared to China, South Korea and others. It reduces the price
competitiveness of India’s exports. India’s rank in the logistics performance index is
44 while China’s rank is 26 and South Korea’s 25.

(ii) Complicated procedures: Domain of exports is complex because it deals with

foreign buyers where different trade laws and practices, are in vogue and need
numerous documents. Given this fact about foreign country, the procedures followed
in India are time-consuming and cumbersome than in many other countries.
Fulfilling the documentation process is a task in India.
(iii) Limited access to finance: This is especially true for micro, small, and medium
enterprises (MSMEs), even though they account for close to half of India’s total
exports. According to the trade promotion council of India, the factors standing in
the way of exporters availing of trade finance are:

a) High cost of finance

b) High collateral
c) Complex procedures
d) Paucity of information

29
 (iv) Trade barriers: India has a strong services sector that contributes significantly to
India’s total exports but faces Non-tariff Barriers (NTBs) in other countries. These
are the tariff and non-tariff trade barriers adversely impacting Indian exporters:
a) High import duties
b) Tariff inconsistency
c) Non-tariff barriers
(v) Policy level barriers: Such barriers include the following:

(a) lack of harmonized standards,

(b) lack of updated regulations on standards, and
(c) the presence of multiple regulatory agencies.

Such policy-level barriers are the reasons for India’s low export share with her neighbouring
countries.

Reasons for India’s sub-par export performance is its high cost of exportable commodities. The
challenge of soaring inflation is a cause for concern. The trade landscape itself is changing due to
three defining drivers shaping trade of the future — technology, geopolitics and global
exigencies, and climate change. The role of technology is intriguing because it is redefining what
we trade, how we trade, and who trades what (Majumdar, 2022).

There is an attempt to tarnish India’s reputation as the pharmacy of the world, and it is the
government’s duty to safeguard India’s image (Sharma and Bhaskar, 2022). Export promotion
also faces the challenges of:

(i) intra- and inter-regional disparities in export infrastructure;

(ii) poor trade support and growth orientation among states;

A major challenge for developing countries’ exporters is that of complying with increasingly
demanding developed countries’ health and safety norms and requirements. It is difficult to
obtain the certifications required for the access to the global value chains, especially in the agro-
industry (Belloc and Maio, 2012).

30
6.8 STRATEGIES FOR EXPORT PROMOTION
The strengths and weaknesses of India's export policies identified both at the governmental
(macro) and industry (micro) levels to come up to the required global standards. Export strategy
needs to be reformulated as an integral component of the national macro-economic strategy.
Special focus has to be built in this exercise on micro-level planning of exports based on a
smaller selective number of niche products (and services) and niche markets than has been
attempted so far. To take advantage of changing world demand for higher value added products
and at the same time meeting the critical test of "dynamic international competitive advantage is
required" (Wadhva, 1998).

It needs to be mentioned that creation of appropriate institutions and a liberalised export

promotion environment alone cannot automatically guarantee greater exports. It is also important
to draw up optimal programme by way of product and market promotion strategies in the
following way:

(i) Accelerating Infrastructure Development,

(ii) Product Development,
(iii) Market Development,
(iv) Revamping Trade Information System,
(v) Human Resource Development in foreign trade sector.

For promoting exports, there is need for having an appropriate strategy. Prasad (2017) has
described following strategy:

(i) Demand Based Export Basket Diversification: Till now India’s focus has been on
exporting what India can (or supply based). Now India has to shift to items for
which there is world demand and India also has basic competence. A demand-based
export basket diversification approach which can give a big push to exports is
needed.
(ii) Tariff and FT Policy Issues and GST Implications: Two fundamental reforms
needed in India’s trade sector are:
(a) Rationalizing tariffs,
(b) Streamlining export promotion schemes also in the light of GST.

31
While with the present global situation, a lot of tariff rationalization can be done.

Though different rates of tariffs are levied not just with the motive of revenue generation,
but for various reasons including protecting the domestic sectors, providing differential
treatment to sectors, avoiding inverted duties, etc. There is scope for India to reduce its
applied tariffs substantially and simultaneously withdraw most of the export promotion
schemes. Sectorally, there is scope to lower duties in many items, while retaining higher
duties for some sensitive items. This will also impact India’s FTAs/RTAs/PTAs which
have been negotiated. There is scope for better negotiations of new ones.

(iii) Streamlining Export Promotion Scheme: The duty drawback schedule needs to be
reworked. Export promotion schemes also have to be suitably reformulated. An
exercise needs to be done to list out the major items where still relatively high import
duties are levied and where EPCG scheme is being availed. For such items zero
duties or near zero duties can be levied and simultaneously the EPCG scheme can be
withdrawn.
(iv) Export competitiveness: The countries where India is competitive are the BRICS
partners except China, major Latin American countries, some ASEAN and African
countries. India’s foreign trade policy needs to take into account the difference in
India’s competitiveness in different markets as revealed by the BRER. Export
competitiveness can also be seen by looking at price competitiveness.
(v) Export Infrastructure and Logistics: India has made great progress in building airport
related infrastructure, but is lagging behind in sea-port related infrastructure.
Therefore, export infrastructure, particularly ports-related infrastructure, which
affects trade, needs immediate attention.

(vi) Reforms related to Digital Infrastructure: Digital Infrastructure is as important as

physical infrastructure for growth of industrial and trade sectors. To scale up the
linkages, besides physical connectivity, virtual connectivity inside India’s vast market
as well as to external markets, needs to be improved.

32
E-commerce and E-payments will be greatly facilitated by a well-developed broadband
infrastructure.
(vii) Trade Facilitation: Greater trade facilitation should be provided by removing the
delays and high costs due to procedural and documentation factors. Despite greater
trade facilitation measures in recent years, the time to export and cost of exports are
higher in India. Streamlining is needed to reduce the number to the barest minimum.
Multiple compliance requirements both statutory and administrative need to be
reduced along with judicial reforms with time limit for disposal of litigations.
(viii) FDI linked and Value Added Exports: India needs to pursue this vehicle for export
enhancement. It can help in better market access, sometimes secure markets and also
help in technology and skill up gradation. India needs to enhance exports of value
added items. There is a need for India to move up the value chain.
(ix) Approach towards WTO and Mega FTAs: Given the situation, successful WTO
negotiations seems to be the first best option for India. The tariff reforms could help
us in taking a more pro-active role in the WTO. The second best option could
possibly be to have useful FTAs with some major countries while actively expanding
our engagements with BRICS and ASEAN. We enjoy competitive advantage with
many of these countries and a part of India’s exports are directed towards these
markets.
(x) National Priority Sector for Exports and greater States’ participation in Exports:
States need to play an active role in the export effort as they are also the beneficiaries
of the resultant development. India’s export policy has to be more decentralized and
state-specific. NITI Aayog recognizes this fact and released an Export Preparedness
Index (EPI) to enhance a sense of competition between States and encourage them to
adopt export promotion policies.
(xi) A Global Market Intelligence Cell (GMIC) in DEA: There is a need for a GMIC. This
cell in DEA should compile global information on domestic regulations and barriers
in goods and services. These barriers come in the way of greater trade between India
and the partner countries and greater inflow of investments to India.
(xii) Active involvement of Indian Missions abroad, EPCs and FIEO in Export Promotion.
(xiii) Creation of an ombudsman for resolving export related problems and disputes.

33
 (xiv) A clear-cut Agri Trade Policy.

In an era where international trade has become a highly complex and specialised operations,
export promotions calls for a high degree of skills and flexibility in approach to meet emerging
situations. Further, to improve the position on trade, Indian policymakers need to
review how the currency is managed. A strong currency in real terms will not help the export
sector.

In any well designed schemes, misuse is bound to happen. What is important is the ability of the
systems to rectify the cracks before it becomes the gap. The system set out for stopping misuse
should be changing with time. Otherwise the reaction to the misuse would be predictable and it
would not have any deterrence to stop misuse.

Finally, policies for long-run export growth must also be considered. In this context, it is
important to exploit the complementarity between EPPs and the set of policies aimed at
improving local firms’ productivity and technological content of domestic produced goods.
Cooperation between the government and the private sector is crucial in order to identify
distortions.

Check Your Progress B

1. Identify four challenges before export promotion into different categories?

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2. Write three challenges which you consider most important?

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3. What are the components of infrastructure challenge?

34
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4. What do you mean by strategy for export promotion?

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5. What is export promotion index?

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6.9 LET US SUM UP

Exports play a major role in the economic development of a country. More the exports more will
be the inward foreign remittance, more jobs and employment, lower current account deficit, and
hence greater overall economic growth. Therefore, India needs to increase its export performance
and grow worldwide.

The accent on export promotion in India gained momentum once it was recognised that the
foreign trade particularly exports, is an important element in the economic progress. A number of
export promotion institutions and a fairly elaborate system of export incentives were therefore
set in place to further the cause of exports.

The wide ranging reforms in trade policy undertaken in 1991 can be regarded as the turning point
in India's foreign trade sector. Export promotion become an article of faith with the Government
and has formed the cornerstone of an integrated export strategy.

The key element of the India’s export promotion policy include: creation of specialised
commodity based Export Promotion Councils/Commodity Boards. Special type of
Organisations/Institutions were also created to look after specific aspects relating to export and
export promotion which consist of the Export Credit and Guarantee Corporation (ECGC), Export
35
Inspection Council (EIC), Directorate-General of Commercial Intelligence & Statistics
(DGCI&S), India Trade Promotion Organisation (ITPO), Indian Institute of Foreign Trade (IIFT)
etc. The efforts of the different export related organisations is being supplemented by the
different Chambers of Commerce and Trade Associations. The Indian missions abroad have also
been required to play a more active role in promoting commercial diplomacy. 'The various State
Governments in India have on their part, set up Export Promotion Industrial Parks and "Niryat
Bandhus" for speeding up export promotion work.

'The stifling system of administrative controls on imports and most of the' export items were
removed and the customs tariffs substantially reduced so as to enable the Indian industry to
import much needed capital goods and equipment to build up export capacities.

For a sound export strategy it is necessary to bridge the existing technology-gap in respect of
many of export products and improve the financial capabilities and marketing clout of several
export promotional organisations. The country has also to improve substantially of its
infrastructure facilities in terms of transportation of cargo, telecommunication networking and
port handling facilities.

Free trade agreements (FTAs) are the latest trend in de-globalisation comes at a cost by
preferring friendly economies for supply of inputs over the most efficient ones. There remains
huge potential for exports of select products to select countries in line with India’s export
capability and import demand.

6.10 KEY WORDS

• Domestic Tariff Area (DTA) means an area within India that is outside the Special
Economic Zones (SEZ). So any area which is not under the jurisdiction of a custom
bonded area is called a Domestic Tariff Area. The DTA enables companies to set up
manufacturing units that cater to the needs of the domestic market. SEZ is for export
oriented units and not for domestic market at all.
• Man days of employment: A unit of measurement based on a standard number of man-
hours in a day of work. A man-year, or person-year, is a unit of measurement for the
amount of work done by an individual throughout the entire year, expressed in the

36
 number of hours. The man-year takes the number of hours worked by an individual
during the week and multiplies it by 52.

6.11 TERMINAL QUESTIONS

1. What is the rationale for according importance to export promotion policy in India? Give
reasons.

2. Discuss the important aspects of evolution of foreign trade policy in India. What aspects the
policies emphasised for export promotion from time to time?

3. Examine the role and functions of important export promotion organisations.

4. Explain the following organisations and their effectiveness in promoting exports:

(a) Export promotion councils

(b) EXIM Bank

(c) Indian Institute of Packaging

5. What kinds of export promotion measures have been adopted in India? Highlight the
schemes of MEIS, RoDTEP, SEIS.

6. What kind of important challenges being faced by exporters in India? Give a critical
analysis of these challenges.

7. For promoting exports suggest a suitable strategy. Should these strategies be part of
foreign trade policy? Amplify your answer.

8. Write notes on:

(a) Export oriented Units (EOUs)

(b) Special Economic Zones (SEZs)

37
References
Aggarwal, Aradhna (2004, November). Export Processing Zones in India: Analysis of The
Export Performance, Working Paper no. 148, Indian Council for Research on International
Economic Relations (ICRIER), https://icrier.org/pdf/wp148.pdf

Bandopadhyay, Kalpataru and Khan, Tagar lal (2020, June 20). Factors of Export Promotion of
MSME in India with Special Reference to Raw Material Availability, Sage Journals, Vol. 47 (1),
https://journals.sagepub.com/doi/10.1177/0970846420930446

Banga, Rashmi (2019). Is India Digitally Prepared for International Trade?, Economic &
Political Weekly, Vol. LIV, No.5, February, pp. 53–62.

Belloc, Marianna and Maio, Michele Di (2012, October 16). Chapter 7, Survey of the Literature
on Successful Strategies and Practices for Export Promotion by Developing Countries (included
in a book ECONOMIC CHALLENGES AND POLICY ISSUES IN EARLY TWENTY-FIRST-
CENTURY SIERRA LEONE, Edited by Omotunde E. G. Johnson, International Growth
Centre), https://www.theigc.org/wp-content/uploads/2012/03/7.-Export-promotion-Marianna-
Belloc-and-Michele-DiMaio.pdf

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