Foreign Trade Promotions: Incentives and Organisational Support
Discover India's foreign trade promotions offer incentives and organisational support to boost export competitiveness and promote global specialisation. Get all the details on foreign trade promotions!
Mridula Sharma20 Aug, 2024
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Foreign Trade Promotions: India's foreign trade policies aim to boost export potential through various incentives and organisational support. These efforts help Indian businesses compete globally, leading to a more efficient global division of labour and specialisation. With a vast workforce, India leverages this advantage by implementing policies and schemes to expand foreign trade.
The Indian government helps firms increase the competitiveness of their exports by providing various schemes and incentives. Additionally, the government has established several institutions to provide infrastructural and marketing support to companies engaged in international trade. In this article, we will delve into the specifics of foreign trade promotion incentives and organisational support and explore their benefits to the Indian economy.Foreign Trade Promotion Measures and Schemes
Foreign Trade Promotions in India comprise a range of policies and initiatives aimed at strengthening the nation's export capacities. These programs offer financial gains and infrastructure support to firms, enabling them to compete on a worldwide scale. Here, we explore some key measures and schemes aimed at foreign trade promotion:1. Duty Drawback Scheme
Merchandise meant for export is exempt from different excise, levy charges, and customs duties. When exporters prove that their products have been exported, they get refunds on these charges, known as ‘Duty Drawbacks.’ For instance, a textile exporter in Mumbai can receive a refund on the excise duty paid on raw materials used in making garments for export.2. Export Manufacturing under the Bond Scheme
Companies can manufacture goods without paying excise duty and other charges if they provide a bond (a formal promise) that the goods are for export. For example, a company producing electronics for international markets can avoid paying excise duty by committing to export its products.3. Exemption from Payment of Sales Taxes
Goods manufactured specifically for export are exempt from sales tax. Additionally, income from export activities has long been exempt from income tax for 100% of Export Oriented Units and units in Export Processing Zones (EPZs) or Special Economic Zones (SEZs). For instance, a small-scale software company in Bengaluru operating in an SEZ doesn’t have to pay sales tax on its exported software products.4. Advance Licence Scheme
This government policy allows suppliers to procure local and imported materials needed for export production without paying duties. Firms that export occasionally can also obtain these licenses for specific export orders. For example, a jewellery manufacturer can import gold duty-free to create pieces destined for international markets.5. Export Promotion Capital Goods Scheme (EPCG)
The EPCG scheme aims to facilitate the import of capital goods for export production. Exporting firms can import these goods at minimal or reduced customs duty rates, provided they meet certain export obligations. If a manufacturer of automotive parts in Chennai complies with these conditions, they can import advanced machinery at a concessional duty rate, helping modernize their production line for better export performance. Service providers, such as an IT company needing specialised software systems for developing export-oriented software, can also benefit from this scheme. These Foreign Trade Promotions help Indian businesses become more competitive on the global stage by reducing costs and providing necessary support.Also Check: Foreign Trade in India During the Colonial Rule
Foreign Trade Promotions Organisational Support
To promote foreign trade, the Indian government has established various institutions to support businesses. Here are the top five organisations involved in Foreign Trade Promotions:1. Export Promotion Councils (EPCs)
Export Promotion Councils are non-profit organizations registered under the Companies Act or Societies Registration Act. Their primary goal is to promote and increase the nation’s exports of specific products. There are currently 21 EPCs, each focusing on different commodities, like textiles or electronics.2. Department of Commerce
The Department of Commerce, part of the Ministry of Commerce, is the main authority overseeing India’s international trade. It manages business relations with other countries, state trading, and export promotion. It also formulates policies related to imports and exports to help boost the country’s trade. This department plays a critical role in negotiating trade agreements and ensuring that Indian exporters receive the support they need.3. Indian Trade Promotion Organisation (ITPO)
The ITPO, created under the Companies Act 1956, helps Indian businesses participate in international trade fairs and exhibitions. It was formed by merging the Trade Development Authority and the Trade Fair Authority of India. With offices in major Indian cities and abroad, ITPO provides support and information to boost exports.4. Export Inspection Council (EIC)
The Export Inspection Council ensures the quality and standards of goods meant for export. Established under the Export Quality Control and Inspection Act of 1963, the EIC conducts quality control and pre-shipment inspections to ensure products meet international standards. Most exported goods must be approved by the EIC.5. Indian Institute of Foreign Trade (IIFT)
Founded in 1963, the IIFT is an autonomous body under the government that aims to professionalise foreign trade management. It offers training in international business, conducts research, and provides data on global trade and investment trends. IIFT's programs help business professionals and students understand the complexities of international trade, equipping them with the skills needed to succeed globally.Benefits of Foreign Trade Promotions
Foreign Trade Promotions Incentives and Organisational Support provide several key benefits to businesses and the economy. Check here some of the top benefits of foreign trade promotions:- Increased Export Competitiveness: Incentives like duty drawbacks and tax exemptions lower export costs, making Indian products more competitive in global markets.
- Economic Growth: Boosting exports increases foreign exchange earnings, supporting broader economic development and investment in infrastructure.
- Employment Opportunities: Growing businesses due to increased exports create more jobs, improving living standards for many families.
- Technological Advancement: Support for importing modern machinery and capital goods helps businesses upgrade, enhancing product quality and manufacturing efficiency.
- Diverse Markets: Organisational support helps businesses enter new international markets, reducing dependency on a single market and spreading risk.
Also Read: Home Trade Vs Foreign Trade, Which Is Better?
Moreover, Foreign Trade Promotions through incentives and organisational support are vital for enhancing India’s global trade position. These measures help reduce costs, improve product quality, and open new markets, driving economic growth and creating job opportunities. Therefore, Physics Wallah (PW) is the leading coaching platform for Commerce students, providing expert guidance and top curriculum. Its comprehensive approach ensures students excel in their studies and competitive exams, setting them up for future success. Boost your potential with the PW Commerce Online Course—join now to excel in your studies and secure your future success!| Also Check: | |
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Foreign Trade Promotions FAQs
What is foreign trade? Can you provide examples?
Foreign trade is the exchange of goods and services between countries. Examples include exporting consumer goods like clothing, importing machinery, and trading services such as travel and patents.
What do you mean by foreign trade promotion?
Foreign trade promotion involves efforts to increase a country's exports and imports through financial incentives, policy support, and infrastructure improvements to help businesses compete globally.
What are the four pillars of foreign trade policy?
India's Foreign Trade Policy (FTP) 2023 focuses on: (i) incentives for remission, (ii) export promotion through collaboration, (iii) ease of doing business and reducing costs, and (iv) emerging areas like e-commerce.
Which organisation promotes foreign trade?
Organisations like the Department of Commerce, Export Promotion Councils (EPCs), and the Indian Trade Promotion Organisation (ITPO) promote foreign trade in India by providing policy support, quality standards, and market access.
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