In the light of growing need & importance of exports for our country it is of utmost importance that everyone should

have an insight in the field of exports. In the course of last decade, the export scenario in India has undergone a tremendous change. The liberalization initiated by the government, the keen competition in the market place & the rapid increase in the export of services have all combined to change the picture completely This project will be covering various aspects of export finance.

Export in simple words means selling goods abroad. International market being a very wide market, huge quantity of goods can be sold in the form of exports. Export refers to outflow of goods and services and inflow of foreign exchange.

FACILITIES AND INCENTIVES TO INDIAN EXPORTERS Promotion of export has been a major thrust area of the Ministry of Commerce and Industry for the last three decades. Apart from this. many other Central / State Ministries have also been involved in the promotion of Indias exports. Many Export Promotion Councils, Public Sector Undertakings, Chambers of Commerce, Industries Associations and Services Organisations are also contributing towards the promotion of Indian exports. The facilities and incentives presently available to the Indian exporters include the following. Marketing Development Assistance (MDA) The Ministry of Commerce and Industry has a scheme of MDA, which was launched in 1963 with a view to stimulate and diversify the export trade, along with the development of marketing of Indian products and commodities abroad. The MDA is utilized for: Market research, commodity research, area survey and research; Participation in trade fairs and exhibitions; Export publicity and dissemination of information; Trade delegation and study teams; Establishment of offices and branches in abroad; Grant-in-aid to Export Promotion Councils and other approved organizations for the development of exports and the promotion of foreign trade; and any other scheme which is generally aimed at promoting the development of markets for Indian products and commodities abroad. Market Access Initiative (MAI) The Ministry of Commerce and Industry has introduced the MAI in April 2001 with the idea that the Government shall assist the industry in R&D, market research, specific market and product studies, warehousing and retail marketing infrastructure in select countries and direct market promotion activities through media advertising and buyer-seller meets. Financial assistance shall be available under the scheme to EPCs, industry and trade associations and other eligible activities, as may be notified from time

to time. A small allocation of Rs 42 crore has been made for 2002-03. 83 Central Assistance to States The State Governments shall be encouraged to fully participate in encouraging exports from their respective States. For this purpose, a new scheme Assistance to States for Infrastructural Development for Exports (ASIDE) has been initiated which would provide funds to the States based on the twin criteria or gross exports and the rate of growth of exports from different States. Eighty per cent of the total funds would be allotted to the States based on the above criteria and remaining 20 per cent will be utilized by the Centre for various infrastructure activities that cut across State boundaries, etc. A sum of Rs 49.5 crore has already been sanctioned for 2001-02 and further a sum of Rs 330 crore has also been approved for 2002-03. The State shall utilize this amount for developing complementary and critical infrastructure. Towns of Export Excellence A number of towns in specific geographical locations have emerged as dynamic industrial locations and handsomely contributing to Indias exports. These industrial cluster-towns have been recognized with a view to maximiing their export profiles and help in upgrading them to move up the higher value markets. A beginning is being made to consider industrial cluster towns such as Tirupur for Hosiery, Panipat for Woollen Blankets and Ludhiana for Woollen knitwear. Common service providers in these areas shall be entitled for EPCG Scheme, funds under the MAI scheme for creating focused technological services, priority assistance for identified critical infrastructural gaps from the Scheme on Central Assistance to States. Units in these notified areas would be eligible for availing all the Exim Policy Scheme. Special Economic Zones (SEZ) The Government of India had announced an SEZ scheme in April 2000 to promote Indias exports. Four Export Processing Zones (EPZ), namely Noida (UP), Falta (West Bengal), Chennai (Tamilnadu), and Viskhapatnam (Andhra Pradesh) have been converted into SEZs from 1 January 2003. There are seven EPZs in the country. In addition, three formal approvals and 14 in-principle approvals have been granted for the establishment of SEZs in private, state, and joint sectors. Policy initiatives taken to promote SEZs include duty-free import/domestic procurement of goods for development, 84 operation and maintenance of SEZs and SEZ units, external commercial borrowing up to $500 million in a year without any maturity restriction through recognised banking channels and a facility to set up overseas banking units in SEZs. The SEZ units have also been getting exemption from central sales tax on sales made from the domestic tariff area to SEZ units and exemption from service tax to SEZ units and developers. Duty Drawback on Goods Exported Under this Duty Drawback scheme export products get relief of incidence of customs and excise duties paid on raw materials and components used at various stages

of production. It is defined as rebate of duty chargeable on any imported or excisable material used in the manufacture of goods exported from India. Duty Drawback is admissible for exports irrespective of mode of export, i.e. whether despatched by Sea, Air, Land Customs or by Post. Export Financing Financial assistance extended by the banks to exporters at pre-shipment and postshipment stages. While the pre-shipment finance is provided for working capital for the purchase of raw material, processing, packing, transportation, warehousing, etc, of the goods meant for export, post-shipment finance is generally provided in order to bridge the gap between the shipping of goods and the realization of proceeds. With a view to providing pre-shipment credit to Indian exporter at internationally competitive rates, interest, Reserve bank of India announced a new scheme in November 1993 to provide Pre-shipment Credit in Foreign Currency (PCFC) by the banks in India. The PCFC scheme is in addition to normal packing credit schemes in Indian rupees presently available to Indian exporters. Exporters are also permitted to draw foreign exchange from the authorized dealers for the purposes such as foreign travel or for giving advertisement aboard. Therefore, a person resident in India may open, hold and maintain with an authorized dealer, a foreign currency to be known as Exchange Earners Foreign Currency (EEFC) Account, subject to the terms and conditions of the EEFC Account Schemes. Exim Bank Finance The Export-Import Bank of India (Exim Bank) provides financial assistance to promote Indian exports through direct financial assistance. Overseas investment finance, term 85 finance for export production and export development pre-shipment credit, buyers buyers credit, lines of credit, relining credit facility, export bills rediscounting, refinance to commercial banks finance for computer software export, finance for export marketing, and bulk import finance. The Exim Bank also extends non-funded facility to Indian exporters in form of guarantees. The diversified landing of the Exim Bank now covers various stages of export, that is from the development of export market to expansion of production capacity for exports, production for export and pre-shipment financing. The Exim Banks focus is on export of manufactured goods, project exports and export of technology services. Indian JVs / WOS Abroad Facilities are provided for the proposals from Indian companies for overseas investment in joint ventures and wholly owned subsidiaries abroad are considered in terms of the Foreign Exchange Management (Transfer or Issue of any Foreign security) Regulations, 2000. Technology Trade Promotion The Department of Scientific & Industrial Research (DSIR) operates a scheme called Transfer and Trading in Technology (TATT) under which it can grant assistance for technology exports. Apart from financial assistance, the prospective technology / service exporters can also identify possible export opportunities by studying profiles of various developing countries, which have been prepared with the support of DSIR to identify the technology needs of those countries. Under this scheme, the DSIR provides

support by way of grant, to finance efforts for technology exports. The quantum of grant and eligibility is determined on case-to-case basis, but grant can be extended to 100 per cent of the eligible expenses.

Ministry of Commerce And Industry Department of Commerce E&MDA Section New Delhi, the 4th Jan 2007
REVISED MARKET ACCESS INITIATIVE (MAI) SCHEME 1. Scheme Market Access Initiatives (MAI) Scheme is an Export Promotion Scheme envisaged to act as a catalyst to promote Indias export on a sustained basis. The scheme is formulated on focus product-focus country approach to evolve specific market and specific product through market studies/survey. Assistance would be provided to Export Promotion Organizations/ Trade Promotion Organizations/ National Level Institutions/ Research Institutions/ Universities/ Laboratories, Exporters, etc., for enhancement of export through accessing new markets or through increasing the share in the existing markets. Under the Scheme the level of assistance for each eligible activity has been fixed. 2. Scope The following activities will be eligible for financial assistance under the Scheme: i) Marketing Projects Abroad: To support marketing projects abroad based on focus product or focus country approach. Under marketing projects, the following activities will be funded: a) Opening of Showrooms & Warehouses; b) Organising Trade Festival of India a multi-sectoral event to be organised in select centers abroad to promote Brand India by showcasing our strength in services like Health (Ayurveda & Yoga), Taste of India (Indian Cuisine), Tourism, Culture, etc., besides merchandise; c) National Level Participation in Major International Trade Fairs etc.; d) Display in International departmental stores; e) Publication of World Class Catalogues;

f) Publicity Campaign and Brand Promotion; g) Research and Product Development; h) To support Recognized associations in Industrial clusters for marketing abroad; i) Reverse visits of the prominent buyers, etc., from the project focus countries. ii) Capacity Building: For imparting training to the Indian Exporters w.r.t. to export in general and on specific region/country basis; For up-gradation/improvements in Laboratories, Universities, Research Institutions on stand alone or Public Private Partnership basis for fulfilling SPS measures/related testing etc. including reimbursement of testing charges For quality up-gradation of select products for export markets (by skill upgradation using experts/designers, production process improvements, reduction in rejections etc.) For developing Common facility centers; design centers; packaging, etc.

For hiring consultants in the buyer/prospective country iii) Support for Statutory Compliances: Charges/expenses for compliance of statutory requirements in the buyer country including Testing charges for engineering products abroad; Registration charges for product registration abroad for pharmaceuticals, bio-technology and agro-chemicals clinical trials for drugs/pharmaceuticals & medical disposables, medical equipment etc. Other commodities/product groups and the nature of compliance covered for reimbursement under the scheme shall be as approved by the Empowered Committee on a case to case basis. For contesting litigation(s) in the foreign country concerning restrictions/anti dumping duties etc. on particular product(s) of Indian origin. The commodity/ product groups, nature of litigation to be supported and the extent of support shall be as decided by the Empowered Committee on a case to case basis. iv) Studies: Market studies/survey for evolving proper marketing strategies; Export Potential Survey of the States; Projects/Study which further the objectives of the schemes; WTO studies for evolving WTO compatible strategy; All Trade related studies including Joint Study Group(JSG), Free Trade Agreement(FTA), Regional Trade Agreement(RTA) studies etc. Only specific markets studies would be undertaken and these studies would be entrusted to reputed professional organizations. v) Project Development: To generate focussed projects leading to substantial improvement in market access, a shelf of projects shall be prepared by engaging reputed professional organisations. A special focus would be on preparation of projects pertaining to priority sectors and sectors having substantial employment generation potential. vi) Miscellaneous: Developing Foreign Trade Facilitation web Portal (data bases and systems for dissemination of information (electronic or otherwise to Indian Exporters); To support Cottage and handicrafts units; 3. Eligible Agencies Under the Scheme, financial assistance may be given to:

Departments of Central Government and Organisation of Central/ State Governments including Indian Missions abroad Export Promotion Councils Registered Trade Promotion Organisation Commodity Boards Apex Trade Bodies recognized under Foreign Trade Policy of Government of India Recognised Industrial & Artisan Clusters Individual Exporters (only for statutory compliance etc.) National Level Institutions (e.g. Indian Institute of Technologies (IITs), Indian Institute of Management (IIMs), National Institute of Designs (NIDs), NIFT etc.) Research Institutions/ Universities/Recognized laboratories, etc.

Special Economic Zone Scheme Special Economic Zone (SEZ) is a specifically delineated duty free enclave and shall be deemed to be foreign territory for the purposes of trade operations and duties and tariffs. SEZ units may export goods and services including agro-products, partly processed goods, sub-assemblies and components except prohibited items of exports in ITC (HS). The units may also export by-products, rejects, waste scrap arising out of the production process. Export of Special Chemicals, Organisms, Materials, A new export promotion scheme entitled Special Economic Zone (SEZ) was introduced in the Export and Import (EXIM) Policy which came into effect from 1.4.2000. The Scheme envisages a simple and transparent policy and procedure for promotion of exports with minimum paper work. The most important feature of the Scheme is that the SEZ area is considered essentially as a foreign territory for the purposes of trade operations, duties & tariffs. Therefore, goods supplied to SEZ from the Domestic Tariff Area (DTA) are treated as deemed exports and goods brought from SEZ to DTA are treated as imported goods. 2. As per the EXIM Policy, a SEZ can be set up for the manufacture of goods and rendering of services, production, processing, assembling, trading, repair, remaking, reconditioning, re-engineering including making of gold/silver/platinum jewellery and articles thereof.

3. Under the SEZ Scheme, the units are allowed to make or procure locally without payment of duty all types of goods including capital goods, whether new or second-hand, required by them for export production or in connection therewith. Even the goods appearing in the restricted list of the EXIM Policy (1997-2002) are permitted to be imported. However, the goods prohibited for import are not permitted. The Scheme also allows duty free import of goods including capital goods on loan basis. 4. As per the EXIM Policy, the SEZ unit has to be a positive net foreign exchange earner. Net Foreign Exchange Earning (NFE) is calculated cumulatively for a period of five years from the commencement of commercial production according to a prescribed formula. 5. The Special Economic Zones can be set up in the country in the public, private, joint sector or by the State Governments. The minimum size of the Special Economic Zone, however, shall not be less than 1000 hectares. This measure is intended to provide self-contained areas supported by world-class infrastructure oriented towards export production. 6. In pursuance of the policy, four existing Export Processing Zones (EPZ) have been converted into Special Economic Zones w.e.f. 1-11-2000. These Special Economic Zones are: (i) SEEPZ Special Economic Zone, Mumbai; (ii) Kandla Special Economic Zone, Kandla ; (iii) Cochin Special Economic Zone, Cochin; and (iv) Surat Special Economic Zone, Surat. 7. The detailed policy and procedures governing the operations of SEZ units are contained in Chapter 9 A of Export and Import Policy and Handbook of Procedures, Vol. I issued by the Ministry of Commerce. To enable the units located in the Special Economic Zone to import or procure goods without payment of duty, the Department of Revenue has issued two exemption notifications, namely, Nos. 137/2000-Cus. and 52/2000-CE, both dated 19.10.2000. 8. The SEZ Scheme places full trust on the units and, therefore, import and export operations of the units in the Zone are on the basis of self-certification. These units are governed by simplified Customs and Central Excise procedures as discussed below. Import and Export: 9. The SEZ units are allowed to import and export through port, airport, land customs station, ICD, CFS, courier mode (as per courier rules) and post parcel. The software development units can import and export through data communication and telecommunication links. In the case of exports through data communication and telecommunication links, the SEZ units follow the same procedure and practice as is followed in case of EPZ/STP units. As for imports of software through above modes, the units are required to file the Bill of Entry within 24 hours of such import alongwith bank attested invoice and other relevant documents for obtaining notional 'out of charge'. The documents such as invoice etc. in respect of such import are required to be routed through the banks. The value of such software is certified by the Director of the STP/Development Commissioner of SEZ. Further, in case of such software imports, instructions issued by RBI, if any, are also required to be followed. 10. In case of imports, the Bill of Entry with specially stamped endorsement as "SEZ Cargo" is filed with the Assistant Commissioner/Deputy Commissioner of

Customs in the SEZ for assessment. For procurement of goods from domestic sources by SEZ units, CT-3 certificates are issued to the units and against such CT-3, the goods including capital goods are procured from DTA without payment of duty. In both cases, i.e. both in respect of imported and domestically procured cargo, the goods are assessed on the basis of documents furnished by the units. Goods are not examined physically and out-of-charge is given after verifying the marks and numbers on the packages only. 11. When the import consignments are required to be transhipped to a SEZ located at a station away from the place of import, the same is allowed under normal transit procedure. The unit files the Bill of Entry with the Assistant Commissioner/ Deputy Commissioner of Customs in-charge of the SEZ on the basis of the transit document. 12. In case of exports, the Shipping Bill alongwith relevant documents is filed with the Customs authorities in the Zone. As in the case of imports, the SEZ export cargo is not examined in routine and export is allowed on the basis of selfcertification by the units. The units, after self-examination of the consignments, are required to submit the shipping bills to the Assistant Commissioner/Deputy Commissioner of Customs for "let export" order. After obtaining the "let export" endorsement on the shipping bill, the consignment is taken to the gateway port for export. At the gateway port also, the SEZ export consignment is not examined in routine. However, whether at the Zone or at gateway port or during transit of such cargo, the Customs authorities can examine the consignments when there is a specific information/intelligence. For this purpose, the orders of the Assistant Commissioner/Deputy Commissioner of Customs are required to be obtained.

Export Financing

Financial assistence is extended by the banks to the exporters at pre-shipment and post-shipment stages. Financial assitence extended to the exporter priorto shipment of goods from India falls within the scope of pre-shipment finance while that extended after shipment of the goods falls under post-shipment finance. While the pre-shipment finance is provided for working capital for the purchase of raw material, processing, packaging, transportation, warehousing etc.of the goods meant for export, post-shipment finance is generally provided in order to bridge the gap between shipment of goods and and the realisation of proceeds. For raising funds in India, investors can raise a substantial portion of the project cost in India through debt and equity instruments. Applications for long-term loans can be made to State Financial Corporations when the project is small - generally less than Rs.50 million - or to national-level financial institutions, such as IDBI and IFCI, when the project is large. Institutions expect concrete project and market reports, with reasonably firm costs and implementation plans. Other long term financing options include leasing, hire purchase, deferred payment guarantee etc. Capital markets are increasingly the preferred route for raising finances in India, through equity shares, debentures and hybrids. Investors can freely access the capital market and in most cases freely price the issue. Investors with both small as well as large fund requirements can mobilise funds from the market. Private placement with institutional investors is also possible. Indian companies also have the option of raising funds from international capital markets. Short-term finances for working capital requirements are available from commercial banks and through instruments such as fixed deposits, inter-corporate deposits and commercial paper.

Towns of Export Excellence A number of towns in specific geographical locations have emerged as dynamic industrial clusters contributing handsomely to Indias exports. It is necessary to grant recognition to these industrial clusters with a view to maximizing their potential and enabling them to move higher in the value chain and tap new markets. Selected towns producing goods of Rs. 1000 crore or more will be notified as Towns of Exports Excellence on the basis of potential for growth in exports. However for the Towns of Export Excellence in the Handloom, Handicraft, Agriculture and Fisheries sector, the threshold limit would be Rs 250 crores. Common service providers in these areas shall be entitled for the facility of the EPCG scheme. The recognised associations of units will be able to access the funds under the Market Access Initiative scheme for creating focused technological services. Further such areas will receive priority for assistance for rectifying identified critical infrastructure gaps from the ASIDE scheme. The notified towns of export excellence are listed in Appendix 41.
Eleven towns in the country have emerged as dynamic industrial clusters, contributing significantly to Indias exports. These eleven towns are: (1) Tirupur, Tamil Nadu hosiery; (2) Ludhiana, Punjab woollen knitwear; (3) Panipat, Haryana woollen blanket; (4) Kanoor, Kerala handlooms; (5) Karur, Tamil Nadu handlooms; (6) Madurai, Tamil Nadu handlooms; (7) AEKK (Aroor, Ezhupunna, Kodanthuruthu & Kuthiathodu), Kerala seafood; (8) Jodhpur, Rajasthan handicraft; (9) Kekhra, Uttar Pradesh handlooms; (10) Dewas, Madhya Pradesh pharmaceuticals; and (11) Alleppey, Kerala coir products.