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- 1. .Directorate of Online and Distance Education(DDOE) SEMESTER - II MASTER OF BUSINESS ADMINISTRATION INTERNATIONAL BUSINESS MBA 204 © All rights reserved
- 2. UNIT 13 Foreign Trade Promotion in the Indian Context: Incentives & Organizational Support Introduction, Foreign Trade Promotion Measures & Schemes © All rights reserved
- 3. Unit Outcomes 3 • Understand the Indian foreign trade system, including incentives and organizational support • Explain the various trade promotion measures and schemes available to business firms • Gain enhanced knowledge of the foreign trade sector and its challenges • Understand the institutional support provided by the GOI to facilitate foreign trade in the country © All rights reserved
- 4. Introduction © All rights reserved
- 5. Introduction 5 • Foreign trade promotion is an integral part of a nation's economy. India is no exception and has actively promoted foreign trade for centuries • Incentives and organizational support are two important strategies used to promote foreign trade in India • Incentives are given to exporters to encourage them to export their products and services • Organizational support is provided by the Government of India to help exporters understand the rules and regulations of the international market © All rights reserved
- 6. Foreign Trade Promotion Measures & Schemes © All rights reserved
- 7. Foreign Trade Promotion Measures & Schemes 7 • The Foreign Trade Policy of India, also known as the EXIM policy, is a comprehensive set of guidelines and measures that aim to boost India's exports and facilitate imports • The policy is updated every five years and is implemented by the Directorate General of Foreign Trade (DGFT), which operates under the Ministry of Commerce and Industry • The main objectives of the EXIM policy are to increase India's exports, enhance the country's competitiveness in the global market, and create employment opportunities © All rights reserved
- 8. Major Trade Promotion Measures 8 • Duty Drawback Scheme • Export Manufacturing Under Bond Scheme • Exemption from Payment of Sales Taxes • Advance License Scheme • Export Promotion Capital Goods (EPCG) Scheme • Scheme of Recognizing Export Firms as Export House, Trading House, and Superstar Trading House © All rights reserved
- 9. Major Trade Promotion Measures 9 • The Duty-Free Import Authorization (DFIA) Scheme • Export of Services • Export Finance • Export Processing Zones (EPZs) • 100 per cent Export Oriented Units (100 per cent EOUs) © All rights reserved
- 10. UNIT 13 Foreign Trade Promotion in the Indian Context: Incentives & Organizational Support Organizational Support, and Export Processing Zones © All rights reserved
- 11. Organizational Support © All rights reserved
- 12. Organizational Support 12 • The Government of India has been proactive and instrumental in providing organizational support for trade promotion and to facilitate foreign trade, through various organizations and institutions • Various institutions have been established to promote trade in India and abroad, and each institution plays a vital role in supporting trade • These organizations provide various types of support, including financial assistance, technical guidance, and market information, to Indian exporters to help them compete in global markets © All rights reserved
- 13. Organizational Support 13 Department of Commerce Export Promotion Councils (EPCs) The Engineering Export Promotion Council (EEPC) Commodity Boards Export Inspection Council (EIC) © All rights reserved
- 14. Organizational Support 14 Indian Trade Promotion Organization (ITPO) Indian Institute of Foreign Trade (IIFT) Indian Institute of Packaging (IIP) State Trading Organizations © All rights reserved
- 15. Export Processing Zones (EPZs) © All rights reserved
- 16. Export Processing Zones 16 • Export Processing Zones (EPZs) in India are designated industrial areas that are set up to encourage export-oriented manufacturing and trading activities • These zones are typically located near ports, airports, or other transportation hubs to facilitate the movement of goods • EPZs offer various benefits to businesses such as tax holidays, duty- free imports of raw materials, exemption from export taxes, and streamlined procedures for obtaining licenses and permits © All rights reserved
- 17. Functions of Export Processing Zones 17 • EPZs in India are designed to provide an environment that is conducive to export-oriented manufacturing and trading activities. The primary functions of EPZs are to: • Encourage export-oriented production • Promote foreign investment • Create employment opportunities • Facilitate the transfer of technology and knowledge • Provide world-class infrastructure and facilities © All rights reserved
- 18. Eligibility Criteria for Setting up Units in EPZs 18 • The company must be registered under the Companies Act, 1956 or the Companies Act, 2013 • The company must have a minimum of two years' experience in manufacturing or trading. • The company must have a minimum net worth of INR 1 crore (approximately USD 140,000) • The proposed activities of the company must be export oriented. © All rights reserved
- 19. Designated Areas for EPZs 19 • EPZs in India are typically located near ports, airports, or other transportation hubs to facilitate the movement of goods. Some of the prominent designated areas for EPZs in India include: • Kandla Special Economic Zone in Gujarat • Noida Export Processing Zone in Uttar Pradesh • Falta Special Economic Zone in West Bengal • Chennai Special Economic Zone in Tamil Nadu • Cochin Special Economic Zone in Kerala © All rights reserved
- 20. Government Policies for EPZs 20 • The Indian government has implemented various policies and incentives to promote exports and attract foreign investment in EPZs: • Tax holidays for units in EPZs for a period of up to 15 years • Duty-free imports of raw materials and capital goods for units in EPZs • Exemption from export taxes and restrictions on imports and exports • Streamlined procedures for obtaining licenses and permits • Fast-track customs clearance procedures © All rights reserved
- 21. Advantages of EPZs 21 Tax incentives Access to world-class infrastructure Proximity to key markets Streamlined procedures © All rights reserved
- 22. Disadvantages of EPZs © All rights reserved 22 Limited market access High startup costs Dependence on government policies
- 23. Potential challenges for businesses operating in an EPZ © All rights reserved 23 • Infrastructure limitations • Limited access to the domestic market • Regulatory compliance • Competition • Supply chain management • Skilled workforce availability
- 24. Recent Developments in EPZs © All rights reserved 24 • Introduction of the Foreign Trade Policy 2021-2026, which provides a framework for promoting exports and creating a favorable business environment for companies operating in EPZs • Establishment of new SEZs and expansion of existing EPZs to attract foreign investment and promote exports • Introduction of new policies and incentives to support the development of EPZs, including tax exemptions and subsidies for businesses operating in these zones
- 25. UNIT 13 Foreign Trade Promotion in the Indian Context: Incentives & Organizational Support MCQs, Self-Assessment Questions and Keywords © All rights reserved
- 26. MCQs © All rights reserved 26 • Q1. Which of the following is an example of an export promotion council in India? [1 mark, L1] • A) Indian Institute of Foreign Trade • B) Export Inspection Council • C) Coir Board • D) Spice Board • Q2. What is the purpose of Export Processing Zones (EPZs) in India? [1 mark, L1] • A) To encourage import of goods for domestic consumption • B) To encourage export-oriented manufacturing and trading activities • C) To provide tax exemptions for domestic businesses • D) To restrict foreign trade in order to protect domestic industries
- 27. MCQs © All rights reserved 27 • Q3. Which of the following is NOT a commodity board in India? [1 mark, L1] • A) Coffee Board • B) Tea Board • C) Rubber Board • D) State Trading Corporation • Q4. Which government institution in India is responsible for organizing trade fairs and exhibitions to promote exports? [1 mark, L1] • A) Export Promotion Councils • B) Indian Institute of Foreign Trade • C) Indian Trade Promotion Organization • D) Commodity Boards
- 28. MCQs © All rights reserved 28 • Q5. What is the purpose of foreign trade promotion measures and schemes in India? [1 mark, L1] • A) To restrict imports and protect domestic industries • B) To encourage exports and increase competitiveness of Indian businesses in the global market • C) To provide subsidies for domestic businesses to increase their market share • D) To regulate international trade and prevent exploitation of Indian businesses • Q6. Which of the following government institutions is responsible for regulating the quality and safety of exports from India? [1 mark, L1] • A) Indian Institute of Foreign Trade • B) Export Promotion Councils • C) Export Inspection Council • D) Commodity Boards
- 29. MCQs © All rights reserved 29 • 07. Which of the following is a key objective of the Export Promotion Capital Goods Scheme (EPCG) in India? [1 mark, L1] • A) To provide subsidies to exporters for marketing activities • B) To promote import of capital goods for domestic use • C) To provide duty exemptions on imported capital goods for use in export production • D) To restrict the import of capital goods to protect domestic industries • 08. Which of the following is a designated area for Export Oriented Units (EOUs) in India? [1 mark, L1] • A) Export Promotion Zones (EPZs) • B) Special Economic Zones (SEZs) • C) Industrial Parks • D) Free Trade Zones
- 30. MCQs © All rights reserved 30 • 09. Which of the following is an example of an Export Promotion Council in India that specifically focuses on engineering goods? [1 mark, L1] • A) Marine Products Export Development Authority • B) Chemicals and Allied Products Export Promotion Council • C) Engineering Export Promotion Council • D) Handicrafts and Handlooms Export Corporation • 10. What is the purpose of the Duty-Free Import Authorization (DFIA) Scheme in India? [1 mark, L1] • A) To provide duty exemptions on imported goods for domestic use • B) To promote exports by providing duty exemptions on imported inputs used in export production • C) To restrict the import of goods to protect domestic industries • D) To regulate the quality and safety of imported goods
- 31. MCQs - Keys © All rights reserved 31 • Q1. D) - Spice Board • Q2. B) - To encourage export-oriented manufacturing and trading activities • Q3. D) - State Trading Corporation • Q4. C) - Indian Trade Promotion Organization • Q5. B) - To encourage exports and increase competitiveness of Indian businesses in the global market • Q6. C) - Export Inspection Council • Q7. C) - To provide duty exemptions on imported capital goods for use in export production • Q8. B) - Special Economic Zones (SEZs) • Q9. C) - Engineering Export Promotion Council • Q10. B) - To promote exports by providing duty exemptions on imported inputs used in export production
- 32. Self-Assessment Questions © All rights reserved 32 • State the main measures and schemes for promoting foreign trade in India. [15 marks, L1] • Discuss the benefits and drawbacks of setting up a business in an EPZ. [8 marks, L2] • Design a comprehensive foreign trade promotion strategy for a business looking to expand into international markets. [10 marks, L6] • Examine the effectiveness of a particular foreign trade promotion scheme in achieving its objectives. [6 marks, L4]
- 33. Self-Assessment Questions © All rights reserved 33 • Assess the impact of a particular foreign trade promotion measure on the overall growth and development of the Indian economy. [8 marks, L5] • Describe how the government provides support to businesses looking to export their products or services. [10 marks, L2] • Identify the most appropriate foreign trade promotion scheme for a company of your choice, in a particular sector. [6 marks, L3] • Devise a plan for setting up an export-oriented unit in India, considering the various regulatory and compliance requirements. [10 marks, L6]
- 34. Self-Assessment Questions © All rights reserved 34 • List the types of organizational support available for businesses looking to expand into foreign markets. [10 marks, L1] • Evaluate the potential risks and rewards of investing in an EPZ. [6 marks, L5] • Compare and contrast the various foreign trade promotion measures and schemes in India with those of other countries. [10 marks, L4] • Explain the key features of India's foreign trade promotion policies and programs. [8 marks, L2] • Investigate into the potential challenges that businesses may face while operating in an EPZ. [8 marks, L6]
- 35. Keywords © All rights reserved 35 • Foreign trade promotion • Incentives • Organizational support • Export-oriented units • Duty drawback scheme • Trading activities • Government policies • Commodity Boards • Export Promotion Councils • Indian Trade Promotion Organization • Indian Institute of Foreign Trade • Indian Institute of Packaging • State Trading Organizations • Export Inspection Council • Trade fairs and exhibitions • Market access initiatives • Foreign Trade Policy • Special Economic Zones • Export Processing Zones • Tax exemptions • Infrastructure • Proximity to markets • Streamlined procedures. • Limited market access • High startup costs • Dependence on government policies • Foreign Trade Policy
Editor's Notes
- Foreign trade promotion is an integral part of a nation's economy. India is no exception and has actively promoted foreign trade for centuries. The main objectives of foreign trade promotion are to increase the volume of exports, create employment opportunities, balance of payments, and foreign exchange earnings. Incentives and organizational support are two important strategies used to promote foreign trade in India. Incentives are given to exporters to encourage them to export their products and services. These incentives are offered as tax reductions, export subsidies, export credit guarantee schemes, transport subsidies, and market access support. The government provides export incentives to exporters to promote foreign trade, provide employment opportunities, and increase foreign exchange earnings. Organizational support is provided by the Government of India to help exporters understand the rules and regulations of the international market. The government also provides various schemes and services to help exporters access resources. These schemes include export marketing support services, market access facilitation services, and foreign trade promotion services. These services help exporters in market research, marketing, and product promotion. Thus, foreign trade promotion in India is highly essential for the country's economic growth and development. Incentives and organizational support provided by the government are important tools used to promote foreign trade; and are aimed at increasing exports, providing employment opportunities, and increasing foreign exchange earnings.
- India is a growing economy with a diverse range of products and services. Foreign trade plays a significant role in India's economy, contributing to around 50% of the country's GDP. The Indian government has implemented several policies and schemes to promote foreign trade and boost export activities in the country. These measures aim to provide incentives and support to the exporters and improve India's competitiveness in the global market. In this article, we will discuss the major Foreign Trade Promotion Measures and Schemes implemented by the Indian government. The Foreign Trade Policy of India, also known as the EXIM policy, is a comprehensive set of guidelines and measures that aim to boost India's exports and facilitate imports. The policy is updated every five years and is implemented by the Directorate General of Foreign Trade (DGFT), which operates under the Ministry of Commerce and Industry. The current EXIM policy covers the period 2015-2020. The main objectives of the EXIM policy are to increase India's exports, enhance the country's competitiveness in the global market, and create employment opportunities. The policy also aims to promote sustainable development and support the growth of small and medium-sized enterprises (SMEs).
- India is among the fastest-growing economies globally and has become a major player in global trade. The government of India has implemented several trade promotion measures to boost exports and encourage foreign investment in the country. Here are the major trade promotion measures in India: Duty Drawback Scheme The Duty Drawback Scheme is a refund of customs duties and taxes paid on imported materials or inputs used in the production of exported goods. The scheme aims to neutralize the incidence of customs duty and taxes on inputs used in the manufacture of export products. The refund amount is calculated based on the value of the inputs used in the production process. For example, a textile manufacturer exports cotton shirts worth Rs. 10 lakh and pays a duty of Rs. 2 lakh. Under the duty drawback scheme, the manufacturer can claim a refund of the duty paid on the exported goods. Export Manufacturing Under Bond Scheme The Export Manufacturing Under Bond Scheme (EMB) allows exporters to import duty-free raw materials, and components to be used in the production of export products as well as capital goods. The imported materials are kept in a bonded warehouse, and the final products are exported without paying any customs duty, subject to certain conditions. The scheme is designed to provide cash flow relief to exporters and reduce the cost of production. For example, a pharma company imports raw materials worth Rs. 50 lakh and processes them into finished drugs, which are then exported for Rs. 1 crore. Under the Export Manufacturing Under Bond Scheme, the company can import the raw materials without payment of customs duty and export the finished goods without payment of central excise duty. Export Processing Zones (EPZs), Special Economic Zones (SEZs), and Export Oriented Units (EOUs) are areas designated by the Indian government for export-oriented production (to encourage exports). Companies operating in these zones are exempted from paying sales taxes on inputs used in the production of export products, and final products. For example, a company sets up an export-oriented unit (EOU) in a special economic zone and purchases raw materials from a local supplier. As the unit is located in a tax-free zone, it is exempt from paying sales tax on the purchase of raw materials. Advance License Scheme The Advance License Scheme allows exporters to import inputs without paying customs duty for the production of export goods, subject to certain conditions. The license is issued based on the quantity and value of the export products. The exporter is required to fulfill certain export obligations within a specified period. The scheme is aimed at reducing the cost of production and promoting exports. For example, a manufacturer exports garments and wants to import raw materials duty-free. Under the Advance License Scheme, the manufacturer can obtain a license to import the required raw materials without payment of customs duty. Export Promotion Capital Goods (EPCG) Scheme The EPCG Scheme provides a license to import capital goods for pre-production, production, and post-production at zero or a concessional rate of customs duty. The imported goods are to be used for the production of export goods. The exporter is required to fulfill certain export obligations such as achieving a specific level of export performance, to avail of the benefits of the scheme, within a specified period. For example, a company wants to import machinery worth Rs. 1 crore for the manufacture of export goods. Under the EPCG Scheme, the company can import the machinery at a concessional rate of duty, subject to the condition that it exports the goods manufactured using the machinery. Scheme of Recognizing Export Firms as Export House, Trading House, and Superstar Trading House The government of India recognizes select export firms as Export House, Trading House, and Super Star Trading House based on their export performance or export turnover. These firms are eligible for various benefits, such as duty-free imports of raw materials, exemption from payment of certain taxes, and preferential treatment in government procurement. The government grants recognition to select export firms based on their export performance. Export Houses are firms that have an average annual export turnover of at least INR 15 crore ($2 million) in the previous three years or a minimum export turnover of Rs. 5 crores. Trading Houses are firms that have an average annual export turnover of at least INR 75 crore ($10 million) in the previous three years or a minimum export turnover of Rs. 25 crores. Superstar Trading Houses are firms that have an average annual export turnover of at least INR 500 crore ($67 million) in the previous three years or a minimum export turnover of Rs. 100 crores. For example, a company exports goods worth Rs. 100 crore in a year and is recognized as an export house. The company is eligible for various benefits, such as exemption from payment of income tax and access to government grants and schemes. Another company exports goods worth Rs. 500 crore and is recognized as a superstar trading house, which entitles it to additional benefits.
- The Duty-Free Import Authorization (DFIA) Scheme The Duty-Free Import Authorization (DFIA) Scheme is one of the measures included in the foreign trade promotion measures and schemes in India. It is designed to promote exports by providing duty exemptions on imported inputs used in the production of export goods. For example, let us say that a textile manufacturer in India wants to export cotton shirts to the United States. To produce these shirts, the manufacturer needs to import raw materials such as cotton fabric, buttons, and zippers. Under the DFIA scheme, the manufacturer can apply for duty-free import authorization for these inputs. Once the authorization is granted, the manufacturer can import the required inputs without paying any customs duty. Without the DFIA scheme, the manufacturer would have to pay customs duty on the imported inputs, which would increase the cost of production and make it harder to compete in the global market. However, by availing the benefits of the DFIA scheme, the manufacturer can reduce the cost of production and offer competitive prices for its export products. In this way, the DFIA scheme helps Indian exporters to improve their competitiveness in the global market and boost the country's export earnings. Export of Services India is a major exporter of services, including IT and IT-enabled services, software development, business process outsourcing, and engineering services. The government provides various incentives and support to promote the export of services, such as tax incentives and simplification of procedures. The services sector is also eligible for benefits under the EPCG and Advance License schemes. The government has also designated certain firms as Service Export Houses and International Service Export Houses based on their export performance in the services sector. For example, the Ministry of Commerce and Industry’s Merchandise Exports from India Scheme (MEIS) provides a series of incentives for services exporters. Through MEIS, exporters are eligible for a duty credit scrip that can be used for payment of customs duties on imported goods. Additionally, the government has established the Service Exports from India Scheme (SEIS) which provides incentives for service exports. Finally, various other capacity building initiatives are in place to support the export of services. These include the Information Technology Agreement, the Trade Facilitation Agreement, and the India-ASEAN Comprehensive Economic Cooperation Agreement. Export Finance The government of India provides various export finance schemes to support exporters. These include the Export Credit Guarantee Corporation (ECGC), which provides credit insurance to exporters against non-payment by overseas buyers, the Export-Import Bank of India (EXIM Bank), which provides finance to exporters (including pre-shipment and post-shipment credit, overseas investment finance, and buyer's credit) to support their working capital and investment needs, and the Interest Equalization Scheme, which provides interest subsidies on export credit. The government also provides export finance through commercial banks and specialized export finance institutions. Export Processing Zones (EPZs) EPZs are specially designated geographical areas where manufacturing and export activities are encouraged and offer a range of facilities and incentives to exporters, such as exemption from customs duties, sales tax, and income tax. The government provides various incentives to companies operating in EPZs, including exemption from customs duty and sales tax on inputs used in export production. Companies operating in EPZs are also allowed to import capital goods at concessional rates. The EPZs also offer world-class infrastructure and facilities, such as power, water, and transportation, to promote export activities. The Kandla Special Economic Zone in Gujarat and the Noida Export Processing Zone in Uttar Pradesh are examples of EPZs in India. 100 per cent Export Oriented Units (100 per cent EOUs) 100 per cent EOUs are companies or manufacturing units that are exclusively focused on exports. These units are eligible for various incentives, including exemption from customs duty and sales tax on inputs used in export production. The units are also allowed to import raw materials and capital goods, machinery, and equipment duty-free and are eligible for benefits under the EPCG and Advance License schemes. For example, the Tata Motors plant in Pune, which exports cars to various countries, is an example of a 100% EOU in India. Another example is the HCL Technologies campus in Chennai, which is exclusively dedicated to software exports. The Indian government has implemented various measures and schemes to promote foreign trade, attract foreign investment and boost export activities in the country. These measures provide incentives and support to exporters and improve India's competitiveness in the global market. These measures provide incentives and support to exporters and improve India's competitiveness in the global market. These measures further aim to reduce the cost of production, provide financial assistance, and offer various tax incentives and benefits to exporters. The government's efforts to promote foreign trade have been successful in making India a major player in the global market, particularly in the services sector.
- The Government of India has been proactive and instrumental in providing organizational support for trade promotion and to facilitate foreign trade, through various organizations and institutions. Various institutions have been established to promote trade in India and abroad, and each institution plays a vital role in supporting trade. These organizations provide various types of support, including financial assistance, technical guidance, and market information, to Indian exporters to help them compete in global markets.
- Department of Commerce: The Department of Commerce is the nodal department for the promotion of India's international trade. It is responsible for formulating and implementing policies and programs for the development and promotion of India's foreign trade. The department works closely with other government agencies and stakeholders to improve the competitiveness of Indian products and services in global markets. It provides a wide range of services to Indian exporters, including market intelligence, export promotion, and trade facilitation. The department provides financial assistance to exporters for participation in international trade fairs and exhibitions, organizes trade delegations and buyer-seller meets, and promotes Indian goods and services in foreign markets. The department also formulates policies and regulations for the development of special economic zones, export-oriented units, and software technology parks. The Department of Commerce has initiated various schemes such as Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS) to provide financial assistance to Indian exporters. The department also manages the Foreign Trade Policy (FTP) which lays down the policies and procedures for exports and imports. It operates the Trade Infrastructure for Export Scheme (TIES) which aids with the development of export infrastructure such as cold storages and warehouses. Export Promotion Councils (EPCs): EPCs are industry-specific, non-profit organizations established by the Government of India to promote and develop exports from India. These councils are set up by the Ministry of Commerce and Industry to promote and facilitate exports of specific products from India. These councils provide a platform for exporters to interact with each other, exchange information, and coordinate their export-related activities. EPCs provide market intelligence and information to exporters, organize trade fairs and exhibitions, and facilitate interaction between exporters and importers. They also provide financial assistance to exporters for participation in international trade. As of 2021, there are 14 Export Promotion Councils (EPCs) in India that are recognized by the Government of India, each representing a specific sector of the economy, such as jewelry, engineering, chemicals, leather, textiles, gems, handicrafts, and electronics. The Engineering Export Promotion Council (EEPC) promotes and facilitates exports of engineering products from India. It organizes international trade fairs and exhibitions to showcase Indian engineering products to the global market. The Gem and Jewellery Export Promotion Council (GJEPC) promotes and facilitates exports of gem and jewelry products from India. It provides training and consultancy services to Indian gem and jewelry exporters to enhance their skills and knowledge. The Handloom Export Promotion Council (HEPC) promotes and facilitates exports of handloom products from India. It provides financial assistance and marketing support to Indian handloom exporters. Commodity Boards: Commodity Boards are statutory bodies established by the Government of India to promote and regulate the export of specific agricultural and horticultural products. The boards operate under the Ministry of Commerce and Industry and work closely with other government agencies to promote exports of commodities such as coffee, tea, spices, and rubber. The boards provide a range of services to exporters, including market intelligence, quality control, and export promotion. They also regulate the production and export of these commodities to ensure quality and standardization. The Coffee Board of India promotes and regulates the production and export of coffee from India. It provides financial assistance, technical guidance, and marketing support to Indian coffee growers and exporters. The Spices Board of India promotes and regulates the production and export of spices from India. It provides quality certification and market information to Indian spice exporters. The Rubber Board of India promotes and regulates the production and export of rubber from India. It provides technical guidance, market information, and financial assistance to Indian rubber growers and exporters. The Tobacco Board of India is responsible for promoting and regulating the production and export of tobacco from India. It provides financial assistance, technical guidance, and marketing support to Indian tobacco growers and exporters. The Central Silk Board of India is responsible for promoting and regulating the production and export of silk from India. It provides financial assistance, technical guidance, and marketing support to Indian silk growers and exporters. The Tea Board of India is responsible for promoting and regulating the production and export of tea from India. It provides financial assistance, technical guidance, and marketing support to Indian tea growers and exporters. The Coir Board of India is responsible for promoting and regulating the production and export of coir and coir products from India. It provides financial assistance, technical guidance, and marketing support to Indian coir growers and exporters. Export Inspection Council (EIC): The Export Inspection Council is a statutory body set up by the Government of India to ensure the quality and safety of export products. The council operates under the Ministry of Commerce and Industry and is responsible for enforcing quality standards for export products. The council provides certification and inspection services to exporters to ensure that their products meet the quality standards of the importing countries. The EIC provides inspection and certification services to Indian exporters to ensure that their products meet the quality standards of the importing countries. For example, it inspects seafood exports from India to ensure that they meet the quality standards of the European Union. The EIC also operates the Electronic Data Interchange (EDI) system to facilitate the electronic exchange of trade-related documents between Indian exporters and importers.
- Indian Trade Promotion Organization (ITPO): The Indian Trade Promotion Organization is a premier trade promotion organization of the Government of India. It operates under the Ministry of Commerce and Industry and is responsible for promoting India's trade and investment. The organization organizes trade fairs and exhibitions to showcase Indian products and services to the international market. It also provides a range of services to Indian exporters, including market intelligence, business matching, and trade facilitation. The ITPO operates the India International Trade Fair (IITF) which is held annually in Delhi. The fair provides a platform for Indian businesses to showcase their products and services to the global market. The ITPO also operates the International Exhibition-cum-Convention Center (IECC) which is a state-of-the-art exhibition and convention center in Delhi. The center hosts various international trade fairs and exhibitions throughout the year. Indian Institute of Foreign Trade (IIFT): The Indian Institute of Foreign Trade is an autonomous public business school established by the Government of India. The institute offers courses in international business management and provides research and consultancy services to Indian businesses. The institute also conducts training programs for Indian exporters to enhance their skills and competencies in global business. The IIFT further offers a two-year MBA program in International Business which is highly regarded in the industry. The program provides students with a global perspective and prepares them for careers in international business. The institute also offers short-term certificate courses in areas such as export-import management and international trade finance. Indian Institute of Packaging (IIP): The Indian Institute of Packaging is an autonomous body established by the Government of India to promote excellence in packaging. The institute offers training and consultancy services to Indian businesses to improve the quality and design of their packaging. The institute also conducts research and development activities to promote innovation in packaging. The IIP offers various courses in packaging design, technology, and management. These courses are designed to enhance the skills and knowledge of Indian packaging professionals. The institute also conducts research and development activities to promote innovation in packaging. For example, it has developed eco-friendly packaging solutions using biodegradable materials. State Trading Organizations: State Trading Organizations are government-owned entities that engage in international trade on behalf of the Government of India. These organizations operate under the Ministry of Commerce and Industry and are responsible for importing and exporting various products. Some of the major State Trading Organizations in India include the State Trading Corporation of India, the Metals and Minerals Trading Corporation of India, and the Project and Equipment Corporation of India. The State Trading Corporation of India (STC) is one of the largest trading companies in India. It engages in the import and export of various products such as wheat, rice, and fertilizers. The Metals and Minerals Trading Corporation of India (MMTC) is a major exporter of minerals such as iron ore, coal, and copper. The Project and Equipment Corporation of India (PEC) specializes in the export of engineering goods, consultancy services, and project exports. State trading organizations play an important role in promoting foreign trade by providing a reliable and efficient trading platform for Indian businesses. They also facilitate the import of essential commodities such as food grains and petroleum products.
- Export Processing Zones (EPZs) in India are designated industrial areas that are set up to encourage export-oriented manufacturing and trading activities. These zones are typically located near ports, airports, or other transportation hubs to facilitate the movement of goods. EPZs offer various benefits to businesses such as tax holidays, duty-free imports of raw materials, exemption from export taxes, and streamlined procedures for obtaining licenses and permits. These benefits are intended to attract foreign investment and promote exports from India. In addition to EPZs, India has also established Special Economic Zones (SEZs), which offer similar incentives to businesses but are larger in size and offer more comprehensive infrastructure and facilities.
- EPZs in India are designed to provide an environment that is conducive to export-oriented manufacturing and trading activities. The primary functions of EPZs are to: Encourage export-oriented production and manufacturing. Promote foreign investment. Create employment opportunities. Facilitate the transfer of technology and knowledge. Provide world-class infrastructure and facilities.
- Companies interested in setting up units in EPZs in India must meet the following eligibility criteria: The company must be registered under the Companies Act, 1956 or the Companies Act, 2013 The company must have a minimum of two years' experience in manufacturing or trading. The company must have a minimum net worth of INR 1 crore (approximately USD 140,000) The proposed activities of the company must be export oriented.
- EPZs in India are typically located near ports, airports, or other transportation hubs to facilitate the movement of goods. Some of the prominent designated areas for EPZs in India include: Kandla Special Economic Zone in Gujarat Noida Export Processing Zone in Uttar Pradesh Falta Special Economic Zone in West Bengal Chennai Special Economic Zone in Tamil Nadu Cochin Special Economic Zone in Kerala Each of these EPZs is designed to promote export-oriented manufacturing and trading activities in different industries and sectors. Example of EPZ in India: One example of an EPZ in India is the Cochin Special Economic Zone, located in the state of Kerala. The Cochin SEZ covers an area of approximately 1,050 acres and is home to over 200 companies engaged in a wide range of industries including electronics, engineering, food processing, and textiles. The zone offers world-class infrastructure and facilities including a container terminal, a bulk terminal, a power plant, and a water treatment plant.
- The Indian government has implemented various policies and incentives to promote exports and attract foreign investment in EPZs. Some of the key policies and incentives include: Tax holidays for units in EPZs for a period of up to 15 years Duty-free imports of raw materials and capital goods for units in EPZs Exemption from export taxes and restrictions on imports and exports Streamlined procedures for obtaining licenses and permits. Fast-track customs clearance procedures.
- EPZs offer several advantages to businesses looking to establish export-oriented manufacturing and trading operations in India. Some of the advantages include: Tax incentives: Companies operating in EPZs are eligible for tax exemptions and other incentives, which can significantly reduce their operating costs. Access to world-class infrastructure: EPZs provide world-class infrastructure and facilities, including modern factories, warehousing facilities, and transportation links, which can help businesses improve their productivity and efficiency. Proximity to key markets: EPZs are typically located close to major ports and airports, which provides easy access to key export markets. Streamlined procedures: EPZs provide streamlined procedures for obtaining licenses and permits, which can help businesses save time and reduce bureaucracy.
- While EPZs offer several advantages to businesses, they also have some disadvantages. Some of the disadvantages include: Limited market access: EPZs are designed to promote exports, which means that businesses operating in these zones may have limited access to the domestic market. High startup costs: Establishing a manufacturing or trading operation in an EPZ can be expensive, as businesses need to invest in facilities, equipment, and personnel. Dependence on government policies: The incentives and policies that support EPZs are subject to change, which means that businesses operating in these zones may be vulnerable to changes in government policy.
- Operating in an Export Processing Zone (EPZ) can offer several benefits to businesses, including tax exemptions, duty-free imports, and exports, and streamlined regulatory procedures. However, there are also potential challenges that businesses may face while operating in an EPZ, including: Infrastructure limitations: EPZs are typically located in remote areas and may have limited infrastructure such as transportation networks, communication systems, and power supply. This can make it challenging for businesses to operate efficiently and effectively. Limited access to the domestic market: EPZs are designed to promote exports, and businesses located in these zones may face restrictions on selling their products within the domestic market. This can limit opportunities for businesses to expand their customer base and increase revenue. Regulatory compliance: Businesses operating in EPZs must comply with a range of regulations related to labor laws, environmental standards, and trade policies. These regulations can be complex and time-consuming to navigate, particularly for small and medium-sized enterprises. Competition: EPZs often attract businesses from multiple sectors, and the competition can be intense. Businesses must be prepared to compete on price, quality, and innovation to succeed in these environments. Supply chain management: EPZs often require businesses to source raw materials and components from outside the zone. This can create logistical challenges in terms of supply chain management and inventory control. Skilled workforce availability: Businesses operating in EPZs require a skilled workforce to operate efficiently. However, the availability of skilled workers may be limited in remote areas where many EPZs are located. Businesses operating in EPZs need to carefully evaluate the benefits and challenges of locating in these zones and develop strategies to overcome the potential challenges they may face.
- In recent years, the Indian government has announced several initiatives aimed at promoting the development of EPZs in the country. Some of the recent developments include: Introduction of the Foreign Trade Policy 2021-2026, which provides a framework for promoting exports and creating a favorable business environment for companies operating in EPZs. Establishment of new SEZs and expansion of existing EPZs to attract foreign investment and promote exports. Introduction of new policies and incentives to support the development of EPZs, including tax exemptions and subsidies for businesses operating in these zones.