Indian Government offers special schemes to importers of India only for those imported product, which will be used in future for manufacturing of those goods which are meant for export. By this government not only motivates the industrial growth and development but also brings the foreign currency after the final export process. Important import incentives offered by the Government of India, that considerably decrease the effective tax rates for the import companies are as follows:
Commercial importers may benefit import incentive under preferential rate only for those goods which are imported from preferential countries such as Mauritius, Seychelles and Tonga. Claims for these preferential rates can be obtained when some certain conditions are satisfied and supporting documents, such as certificates of origin are available.
Duty Entitlement Pass Book (DEPB) Scheme
DEPB is an export incentive scheme for exporters of India provided by Indian Government. It is issued after export, at a predetermined credit on the FOB value. It came into existence on 01.04.1997, and then it had both pre-export and post-export DEPB. The last one is stopped on 01.04.2000. It is an optional facility for exporters not desiring to go through the licensing routine. The objective of DEPB scheme is to neutralize the incidence of customs duty on the import content of the export product, by way of grant of duty credit against the export product. The DEPB or the items imported against it are freely transferable and are valid for imports within 24 months of its issuance.
Duty Drawback scheme allows refund of customs duty and the excise duty on the inputs used in the manufacture of the export product at a specified percentage of FOB value of exports. Service Tax on the input services is also the part of it. The exporter can claim drawback or refund of excise and customs duties being paid by his suppliers. The final exporter can claim the drawback on material used for the manufacture of export products. In case of re-import of goods the drawback can be claimed.
The Drawbacks are the customs paid on imported inputs plus excise duty paid on indigenous imports and duty paid on packing material. Duty drawback scheme for physical exports is being administered by the Directorate of Drawback, Dept. of Revenue, Ministry of Finance and Government of India.
If the goods are re-exported, it should be done within 2 years from the date of payment of duty when they were imported. After the inspection, 98% of the duty is allowable as drawback. In case the goods imported are used before its re-export, the drawback will be allowed as at reduced percent.
Duty Free Import Authorization (DFIA) Scheme
DFIA is issued to allow duty free import of inputs only for the products covered under SION on post export and pre export basis like fuel, oil, energy sources, catalyst etc. Pre export basis carries the actual user condition whereas post export basis are transferable. This scheme will come into force from 1st May, 2006. A minimum 20% value addition shall be required for issuance of such Authorization.
Deemed Exports is a special type of transactions in which the goods supplied do not leave the country and the payment for such supplies is received either in Indian rupees or in foreign exchange. Deemed Exports are eligible for the benefits, such as
Refund of DBK
Exemption or refund of TED
Advance authorization/Advance authorization for annual requirement, DFIA
Above all is subject to terms and conditions as in Hand Book of Procedures (HBP).
Agri Export Zones
All the importers which come under the Agri Export Zones are permitted to all the import facilities and incentives.
Served from India
Government of India has introduced "Served from India Scheme" to accelerate growth in export of services so as to create a powerful and unique 'Served From India' brand, instantly recognized and respected world over. Duty Credit Scrip issued under served from India scheme and import incentive is given for import of any capital goods including spares, office equipment and professional equipment, office furniture and consumables, provided it is part of their main line of business. In the case of hotels and stand-alone restaurants, the duty credit entitlement may also be used for the import of food items and alcoholic beverages. The utilization is with AU Condition and Non-transferable except within a Group Company or Managed Hotel. This benefit of Duty Credit Scrip is granted from Regional Offices of DGFT, spread all over the country. Each year Duty Credit Scrip worth hundreds of crore are granted.
Manufacture under Bond
In manufacture under Bond scheme an incentive extended to manufacturers for import of plant, machinery, equipment and raw materials. This import is tax free for exclusive use in the manufacture of goods for export. It is meant to encourage manufacturers, both local and foreign, to manufacture for export within the country.
Export Promotion Capital Goods Scheme (EPCG)
EPCG scheme of Foreign Trade Policy is a special type of incentive given to the EPCG license holder. Under this scheme, a domestic manufacturer can import capital goods such as machinery and plant without paying customs duty or settling at a concessional rate of customs duty. This scheme enables up gradation of technology of the indigenous industry. EPCG Authorizations are issued by Regional Licensing Authority of Director General of Foreign Trade on the basis of nexus certificate issued by an independent chartered engineer. Under EPCG scheme, the capital goods imported are subject to actual user condition and the goods imported cannot be transferred or sold till the fulfillment of export obligation.
This scheme allows import of capital goods for pre production, production and post production (including CKD/SKD thereof as well as computer software systems) at 5% Customs duty subject to an export obligation equivalent to 8 times of duty saved on capital goods imported under EPCG scheme to be fulfilled over a period of 8 years reckoned from the date of issuance of license. Capital goods would be allowed at 0% duty for exports of agricultural products and their value added variants.
Advance Customs Clearance Permit
Under this scheme the Central Government exempts goods imported into India, against an Advance Customs Clearance Permit issued on or before 31st March, 1995 under Para 58 of the Export and Import Policy 1992-1997. In this scheme an importer allow to import raw materials, components, packing and labeling materials etc. without payment of customs duty in India. After that the product by the Indian manufacturer to make the final product as required by the foreign buyers on job work basis then the final product is exported without charging taxes from the custom department.
This scheme is applicable mainly for Machinery items, Industrial Plants, Irrigation Projects, Power Projects, Mining Projects, and Projects for Oil or Mineral Exploration etc. Incentives under the Project Import are for setting up an independent project. After establishment of the project, its final manufactured product is used for the export purpose.