Foreign Trade Promotion & Organizational Support - Foreign Investments, International Business | International Business - B Com PDF Download

Foreign Trade Promotion Measures and Schemes​

Various trade promotion measures and schemes are announced by EXIM policy. The main trade promotion measures are listed below:

i. Duty Drawback Scheme: The exported goods are not subject to customs and excise duty on producing the export documents these duties paid if any are refunded to the exporter this is called duty drawback scheme.

ii. Export Manufacturing under Bond Scheme: The firms manufacturing for export purpose obtain a bond which will entitle them to produce goods without payment of excise and other duties.

iii. Exemption from Payment of Sales Tax: The export goods are free from sales tax. Now this exemption of income tax is available only to 100 percent export oriented units and to the units in the export processing zones and special economic zones.

iv. Advance License Scheme: In this scheme the exporter is allowed duty free supply of domestic and imported inputs required for the manufacture of export goods. Advance license is available for those who export on regular basis as well as adhoc basis. Such license is obtained against exporter's production programme or on export orders received by exporters.

v. Export promotion Capital Goods Scheme: This scheme encourages the import of capital goods for export manufacturing. This scheme allows the export firms to import capital goods with a small amount of custom duty.

vi. Scheme of Recognizing Export Firms as Export House, Trading House and Superstar Trading House: On achieving a prescribed average export of performance in past select years by a firm the government grants the status of export house, Trading house and star trading house to select export firms. Apart from this the export house also need to fulfill the conditions laid by export import policy.

vii. Export of Services: The exporter's performance of service providers is taken into consideration and is recognized. Based on their performance they are categorized as Service Export house, International service export house and international star service export house.

viii. Export Finance: The exporters need finance for their production and also during pre-shipment and post shipment period. These export finance are of two types namely Pre-shipment finance or packaging credit and post shipment finance. The preshipment finance is given for purchase, packing, manufacturing and processing whereas the post shipment finance is done for the date of extending the credit after the shipment of goods to the export country.

ix. Export Processing Zones: these are industrial estates generally situated near airports and seaports. These EPZ provide concessional duty free environment for export production. Such zones have been setup in various parts of India like Kandla in Gujarat, Santa cruz in Mumbai, Falta in West Bengal, Noida in Uttar Pradesh, cochin in Kerela, Vizahagapatnam in Andra Pradesh and Chennai in tamilnadu. Government has allowed development of these zones by private, state or joint sector.

x. 100 Percent Export Oriented Units (EOUs): This scheme was introduced in 1981 this is a complimentary unit to EPZ. The production regime is same as EPZ but these EOUs have more facilities and options for location, raw material, ports, skills and technology.

Organizational Support

In order to process foreign trade the government has setup various institutions. Some of these are:

i. Department of Commerce: This comes under Ministry of Commerce and acts as the apex body which is responsible for country's external Trade activities. This Department of Commerce also frames the import and export policy of the country in general.

ii. Export Promotion Council (EPC): These are non-profit organizations which come under the companies act or the society's registration act. This council promotes the product that comes under their jurisdiction. There are 21 EPCs dealing with different commodities at present in our country.

iii. Commodity Boards: The government of India has established this board to promote and develop the production of traditional commodities and their exports. This board is again a supplementary to EPCs and function the same way. In India there are seven commodity boards namely, coffee board, rubber board, tobacco board, spice board, central silk board, tea board and coir board.

iv. Export Inspection Council (EIC): Under section 3 of export quality control and inspection act 1963 this council was setup by the Indian government. This council aims at developing and maintaining quality control of the export trade and also takes care of pre shipment inspection. This council acts as the apex body. With few exceptions all commodities for export must be passed by EIC.

v. Indian Trade Promotion Organization (ITPO): The ministries of Commerce setup this organization on 1 January 1992 under the company's act 1956, which is based in New Delhi. The two erstwhile agencies trade development authority and trade fair authority was merged into one to form ITPO. This ITPO is a service organization which maintains a regular and close relation with trade, industry and government. ITPO organizes trade fairs both domestically and internationally through this the export firms are given opportunity to participate in international trade fairs. The five branches of ITPO are located in Bangalore, Mumbai, Kolkata, Kanpur and Chennai. The international offices are in Germany, Japan, UAE and USA.

vi. Indian Institute of Foreign Trade (IIFT): An autonomous body registered under the societies registration act with the main aim of professionalizing the country's foreign trade management. The IIFT was setup by government of India in 1963. This has been recognized as a deemed university and provides training for international trade, conduct research in areas of international business and analyze data related to international trade and investment.

vii. Indian Institute if Packaging (IIP): The ministry of commerce and the Indian packaging industry jointly setup this IIP in 1966. The headquarters and laboratory is situated in Mumbai and the other regional offices are in kolkatta, Chennai and Delhi. IIP provides training and research pertaining to packaging. The IIP has a great infrastructure facility which caters to the packaging industries. This institute caters to both domestic and export markets.

viii. State Trading Organization (STC): The trade channels and export units faced difficulty to compete in world market. In 1956 the state trading organization was setup to face this problem. The main aim of STC is to promote and stimulate trade primarily export trade among different trading partners of different nations. Later MMTC (metal and minerals trading corporation) and HHEC (handloom and handicraft Export Corporation) was also setup by the Indian government.