Export Promotion Bodies

Prepared By:- Ankit Dhankar

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 EXPORT PROMOTION BODIES

• Export promotion bodies including all Export Promotion

Councils (EPCs)
• These bodies aims at promoting export of the country.
• These emphasise in particular the initiatives being taken to
intensify market promotion efforts in the key areas and to achieve
diversification of both markets and products in order to face the
challenge of growing competition in the overseas markets.
 Contd…
Export promotion bodies participate in the following sectors:

1. Engineering Export Promotion Council (EEPC)

2. Chemicals, Pharmaceuticals & Cosmetics(CHEMEXCIL)

3. Gems & Jewellery EPC

4. Agricultural & Processed Food Products Export Development Authority

(APEDA)

5. Marine Products Export Development Authority (MPEDA)

6. Electronics & Computer Software(ESC)

7. Chemicals & Allied Products(CAPEXIL)

8. Council for Leather Exports (CLE)

 Contd…

• To promote the various sectors government has

introduced various export promotion bodies.
• Few that we studied are:

Special Economic Zone (SEZ)

Export Credit Guarantee Corporation(ECGC)

Export Oriented Units (EOU)
ECGC

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 What is ECGC?

• Export Credit Guarantee Corporation of India

Limited.
• Established in the year 1957 by the Government of
India.
• An export promotion organization which functions
under Ministry of Commerce & Industry,
Department of Commerce, Government of India.
 ABOUT ECGC

• Fifth largest credit insurer of the world in terms of

coverage of national exports.
• The present paid-up capital of the company is
Rs.800 crores.
• Authorized capital Rs.1000 crores .
 Functions of ECGC
• Provides a range of credit risk insurance covers to
exporters against loss in export of goods and services.
• Offers guarantees to banks and financial institutions to
enable exporters to obtain better facilities from them.
• Provides Overseas Investment Insurance to Indian
companies investing in joint ventures abroad in the form
of equity or loan.
 Application Process: ECGC
Application to the ECGC along
With Rs. 10,000 as initial premium

A statement to be submitted to the ECGC

Every month along with last month’s
Statements & the monthly insurance
Premium cheque (mandatory)

The list of exports also includes the value of export

Shipments & insurance premium to be paid

This is the general process to avail the services of ECGC

 Contd…
• Application is to be made to ECGC in case of non-
receipt of payment within 4 months from the due
date
• Documents required as proof
– E-mails
– Faxes
– Reminders sent through banking channel

In case of suspicion or fraud, ECGC can blacklist the

importer or exporter
Risk Associated
with Exports
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ECGC Policies

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 ECGC Policies

Special
Schemes
Financial (Transfer Guarantee )
Standard Policy Specific Policy Guarantees to To protect Banks
Banks Issuing L/C,
For short term For exports under Confirming L/C,
shipments Deferred Payments, Insurance Cover,
(180 Days) Project Exports, For
Line of Credit,
Service exports Giving credit Overseas Investment
to exporters Insurance & Exchange
Fluctuation Risk
Insurance
 1.Standard Policy-Products

Small Exporters Policy

• Period of Policy: 12 months as against 24 months in the case of Standard Policy.
• Turnover is less than Rs. 50 lacs.
• Declaration of payment **
• Covered amount **
Export Turnover Policy :

• The policy provides additional discount in premium with an

added incentive for increasing the exports beyond the projected
turnover and also offers simplified procedure for premium
remittance and filing of shipment information.
• Turnover policy is applicable to exporters who contribute more
than Rs.10 lacs per annum towards premium.
 2.Financial Guarantees to Banks

Export Finance Guarantee

• If a bank financing an overseas project provides a
foreign currency loan to the contractor, it can protect
itself from the risk of non-payment by the contractor by
obtaining Export Finance Guarantee
• The premium rate is 0.90% per annum for 75% cover
and 1.08% per annum for 90% cover
 3.Special schemes

• Transfer Guarantee **

• Overseas Investment Guarantee **

• Exchange Fluctuation Risk Cover **

 Marine Sector
Free add on marine insurance cover. As a gesture to help the
exporter customers in reducing the cost of transaction ECGC has
tied up with United India Insurance Company . The insurance
cover is available from warehouse to warehouse, for customers
opting for ECGC’s whole turnover policies. As there is no
additional charge for the customer. Many customers across the
country have benefited under this facility and saved substantial
costs.

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 Some of Challenges Faced

• Exchange rate fluctuations are not covered for all exporters except
for the exporters who receive payments from buyer for long
duration.
• Coverage of currencies in case of fluctuation is available for few
currencies only and rest are subject to conditions.
• General insurance companies entering.

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SEZ

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 What is SEZ ?

 Special Economic Zone (SEZ) is defined as "a specifically

delineated duty free enclave and shall be deemed to be foreign
territory for the purposes of trade operations and duties and
tariffs".
 Trade Operations
 Countries
 Partnership
 Different Zones
Eon SEZ –Kharadi, Pune Gujarat’s first special economic zone for IT sector
 Special Economic Zones (SEZs)
Act 2005
The main objectives of the SEZ Act are:
(a) generation of additional economic activities
(b) promotion of exports of goods and services,
(c) promotion of investment from domestic and foreign sources
(d) creation of employment opportunities,
(e) development of infrastructure facilities;
 Setting up a SEZ
There are two ways of setting up a SEZ

By Applying
to State Government

By applying to
Board of Approval
 Some of the important SEZs in
India
• Karnataka Biotechnology and Information Technology Services - SEZ on biotechnology
sector in Bangalore's Electronics City, over an area of 43 acres
• Shree Renuka Sugars Limited - SEZ on sugarcane processing complex covering 100
hectares, comprising a sugar plant, power station and distillery, at Burlatti in Belgaum
district
• Ittina Properties Private Limited and three other - SEZs in IT sector, covering electronics,
hardware and software sectors in Bangalore, over an area of 15.732 hectares
• Wipro Infotech - SEZ on IT / ITES at Electronics City, Sarajpur Bangalore
• Hewlett Packard India Software Operation Pvt. Ltd. - SEZ on IT
• Food processing and related SEZ services in Hassan, over an area of 157.91
 Incentives/Facilities at SEZ
• Duty free import/domestic procurement of goods for development
• 100% Income Tax exemption on export income for SEZ
• Exemption from Central Sales Tax.
• Exemption from Service Tax.
• Single window clearance for Central and State level approvals.
• Exemption from State sales tax and other levies as extended by the respective
State Governments.  
• Exemption from Central Sales Tax (CST).
• FDI upto 100 % is permitted.
• No foreign ownership restrictions
 Export Performances

Year Value (Rs. Growth Rate ( over previous

Crore) year )

2003-2004 13,854 39%

2004-2005 18,314 32%

  2005-2006 22 840 25%

2006-20007 34,615 52%

2007-2008 66,638 93%

2008-2009 99,689 50%

 Helping out other Sectors

• Automobile Sector
• IT Sector
• Textiles and apparel
• Real Estate

• Pharma Sector
• Handicrafts Industry
 Positive Impacts
• To Nation
World class business environment
– Increased FDI
– Higher economic growth
– Infrastructural development
– Export growth
– Employment Opportunities
– Exposure to technology and global markets
 Positive Impacts

• To Business houses
– Hassle free operating environment

– Single window clearance

– Simplified procedure for setting up business, compliance proc with self

certification
– Duty free import

– Tax exemption- VAT, CST, ST, other levies

– External commercial borrowings

– 100% profit reptriation from export earnings

 Positive Impacts

• To People
– Employment opportunities
– Impact on lifestyle and standard of living
– Business infrastructure combined with social facilities

– Better work culture , good education, leadership vision

 New Schemes

• Exports of Flowers (15th Jan 2010)

• Anand Sharma invited Malaysian investments in infrastructure, power and

housing sectors(5th March 2010)
• Opportunities in Mines, agriculture and infrastructure sectors
• Nasscom, the representative body of IT-BPO firms in the country, said it
has recommended that the STPI initiatives are brought at par with special
economic zone (SEZ) schemes to help smaller firms remain competitive.
(17th Feb 2010)

Karnataka SEZs:
• The new policy has revised the service tax structure, withdrawing the
earlier blanket exemption. SEZ units will now have to pay service tax and
claim refunds later
• SEZ units can now re-export items such as pulses, rice
• SEZ developers can supply power without licence from States

• The proposed direct taxes code is implemented, providing clarity over

taxation of these special enclaves. 
 Case Study
NSEZ
(Noida Special economic zone)
• Noida EPZ was established in 1984 and attained the status of SEZ in the year 2000.
• Share in exports, past performance and potential for growth, software and gem &
jewellery have been identified as the thrust areas.
• Spread in 310 acre.
• NSEZ is just after SEEPZ in terms of export performance.
• NSEZ’s proximity to Delhi sets it apart from other SEZs.
• With 151 units in operation, NSEZ contributed 30% of total exports from SEZ in
the year 2008.
• It employs 19,857 people and per unit employment is 131.
• The total government investment in NSEZ is Rs 78 crore
while the private investment is of 650 crores.
• Noida has witnessed higher growth in export in comparison to other
SEZs
 SEZ policy of the Govt. of UP

• Policy on "Single Window" clearance;

• Policy on "Environmental " rules;
• Policy on Energy
• Policy on Inspection

• Policy on Trade Tax and Other Tax

• Policy on management of SEZ
 Reason for NSEZ success
• Proximity to Delhi
– better transport and other infrastructural facilities in comparison to others SEZ.

– Noida is just 24 KM away from Delhi and it comes under national capital territory
(NCT)
– so in terms of administration, infrastructure and business opportunities NSEZ has
an edge over other SEZs.

• Special benefits given by the U.P. government:

– tax benefits are the key determinants in attracting investments

– exempted SEZ developers and units from some state taxes as well and it has
resulted in higher private investments in NSEZ
– Exemptions from the payment of entry tax, trade tax and stamp duty makes NSEZ
the 36 most sought after destination for setting up the units.
EOU

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 What is EOU?
 The EOU Scheme introduced in early 1981, the purpose of the scheme was
basically to boost exports by creating additional production capacity.
 The exporters showed willingness to set up units with long term commitment to
exports under Customs bond operations provided they had the freedom to locate
them in places of their choice and given most of the benefits as provided to units
set up in the Zones.
 EOU provides an internationally competitive duty free environment coupled with
better infrastructural facilities for export production.
 Over the last decade, Export Oriented Units have evolved as a major player in the
country's export effort. They have grown consistently at double digit level, and
recorded a growth of about 27.48% during the year 2004-05
 SALIENT FEATURES
• No license required for import.
• Exemption from Central Excise Duty in procurement of capital goods,
raw-materials, consumables spares etc. from the domestic market.
• Exemption from customs duty on import of capital goods, raw materials,
consumables spares etc.
• Reimbursement of Central Sales Tax (CST) paid on domestic purchases. 
• Reimbursement of duty paid on furnace oil, procured from domestic oil 
companies to EOUs as per the rate of drawback notified by the
Directorate General of Foreign Trade. 
• Re-export of imported goods found defective, goods imported from
foreign suppliers on loan basis etc.
• EOUs in agriculture and horticulture engaged in contract farming may be
permitted to take out duty free goods to the fields of contact farmers for
production.
 OBLIGATIONS OF EOU
• The EOUs are required to achieve Positive Net Foreign Exchange
Earning(NFE). NFE shall be calculated cumulatively for a period of five
years from the commencement of production

• For this purpose, a Legal Undertaking is required to be executed by the

unit with the Development Commissioner.

• The units have to provide periodic reports to the Development

Commissioner and Zone Customs

• Units have to obtain Customs Bonding from the concerned jurisdictional

Central Excise Authority.
 How to set-up an Export Oriented
Unit
Who is eligible to become an EOU?

 An EOU can be set up by any entrepreneur for manufacturing of goods and also for rendering services. 
An EOU can be set up for repair, reconditioning, re-making  and re-engineering also.
 Trading activity is not allowed in the EOU Scheme.
 EOU unit is required to achieve only positive Net Foreign Exchange (NFE) over a period of  5 years.
 EOU can also be set up in the following sectors: -
 Agriculture, Animal Husbandry, Aquaculture, Floriculture, Horticulture, Pisciculture, Viticulture,
Poultry, Sericulture

Conversion of existing DTA/EPCG (Export Promotion Capital Goods) units to

EOU Scheme

 Existing DTA units or EPCG units are permitted for conversion into EOU Scheme as one time option.
 Duties of Customs and Central Excise already suffered shall not be refunded on conversion into EOU.
 PRIOR TO APPROVAL
1) Planning your venture:
Is it your own or Is it with foreign participation and, if so, nature of participation
(foreign investment allowed 100%)
2) What process do you intend to do i.e. Manufacturing, rendering and export of
services, etc
3) Technology to be used:
Indigenous/ foreign
Related cost and conditions
4) Feasibility report:
On your own or with help of consultant
5) The finances involved:
Land, structure, buildings etc.
Capital Goods, machinery etc.
Payment for royalties etc.
Administration and establishment
Others : like interest on loans, related taxes and levies etc.
6) The current competition overseas:
Main competitors, Demand and price levels.
7) The import laws and other requirements in target markets:
Any fiscal/ non-fiscal barriers, like anti-dumping laws.
Quota restrictions.
Preferential treatment to competitor countries.
8) Location of the Unit:
The first thing before setting up an EOU the entrepreneur has to decide the
location of  unit: -
i.   close to port or rail/ road.
ii.  availability of raw material and
iii. Environment clearance needed if unit is located  within 25 kms of an urban
town
Accordingly the application will be submitted to the concerned Development
Commissioner under whose jurisdiction that state comes.
9) Capital goods, machinery and equipment to be used:
Indigenous or foreign (allowed duty free)
Related cost
10) The raw materials and other inputs, like consumables etc. that would be
required:
Source (allowed duty free)
Cost
Monthly, quarterly and annual requirements.
11) The production process:
Whether production process requires air-conditioning plant, special furnaces etc.
Details and cost.
12) The production capacity and spare capacity:

Whether you want to get job work done outside the EOU.
Details of sub-contractors.
Related costs.
13) Any by-products turned out in the production process:
Details of by-products
Whether these would be exported or sold in Domestic Tariff Area (DTA)
14) Effluents or waste-material:
How do you propose to treat these or discharge them.
15) Packaging
Details of packaging (packaging material allowed without payment of duty)
Source
Cost
16) Power:
Whether the normal grid could supply adequate power.
Or there would be a need for a captive power plant.
Cost of power plant
Fuel required for captive power plant (e.g. furnace oil, LPG,  HSD, coal etc.) (allowed
duty free)
17) Other information:
Firm/company should be duly registered and details about Proprietor/Partner/ Directors
etc.
A current account with the bank authorized to deal in foreign exchange should be
opened.
Sale tax registration to be obtained from the Sale Tax Department.
Investment details
18) Mandatory clearances from State Government: -
Pollution clearance certificate.
Approvals of building plan in cases where building is proposed to be constructed.
Registration as a small scale industrial unit, if applicable
Registration under Factories Act.
  HOW TO APPLY

• All applications are to be filed with the concerned Development Commissioner of

Special Economic Zone.

• Visakhapatman Special Economic Zone

• Cochin Special Economic Zone
• Falta Special Economic Zone
• Kandla Special Economic Zone
• MEPZ - Special Economic Zone
• Noida Special Economic Zone
• SEEPZ - Special Economic Zone
• DD for Rs. 5,000/- drawn in favour of The Pay & Accounts Officer, Ministry of
Commerce and Industry, Department of Commerce, payable at the Central Bank of
India, Udyog Bhavan, New Delhi.

• Registration –cum-Membership Certificate (RCMC) should be obtained from the

office of the concerned Development Commissioner.
 APPROVAL PROCEDURE

Letter of Permission (LOP)

• After submitting the application form and if every thing is in order, Letter of
Permission (LOP) is issued by the Zone Administration within 2 weeks after
interview of the promoter by the Approval Committee. 

Legal undertaking (LUT)

• A legal undertaking in the prescribed form undertaking to abide by the terms and
conditions of the LOP has to be executed  by the unit
• A Green Card will be issued  to the unit by the Zone Administration on request.
Approval from State Government  Agencies:

• The unit has to secure approval for its wiring and electrical plan from the Electrical
authorities.

• It has  also to secure power allocation and wiring approval from the State Electricity
Board.

• The industrial water supply is undertaken by the the unit has to take a registration under
the State Government Sales Tax Act and Central Sales Tax Act.

• In case there are effluents or emissions the unit has to secure approval form the Pollution
Control Board.

• Every Zone has a statutory Single Window Clearance Board.

• Noida boasts of a Export Processing Zone ( Home to 100% EOU's).

• At the last count there were 200 EOU's functioning in the campus of the
NEPZ. Most of these units are in the business of manufacturing and
exporting goods such as Gems & Jewellery, Toys, Electronic Items,
Garments and not to mention the latest craze Software.

• The NEPZ Authority provides the units with all the facilities and backup
support to start a EOU and try to resolve all the bottlenecks .This enables
the units to  concentrate on their primary task of manufacturing and
exporting rather then be bogged down by chronic problems of Red
Tapeism , Bureaucratic hurdles Governmental Clearances and not to
mention the ruthless tax authorities. 
Thank You

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