EXPORT INCENTIVES – Part 1
“ Financial Incentives ”
Government has prescribed Export promotion policy whose main objective is to promote Exports and create an overall development of country. However, exports involve more than one country and therefore price levels in the international market are invariably low because of high degree of competition. Hence, for successful and viable export effort there is the need for incentives to provide the price support for rendering India’s exports competitive and viable.
Under the export promotion policy of India, various types of Incentives have been provided which are been listed as follows: –
- Fiscal Incentives: – These type of incentives generally deal with taxation relief provided to exporters so that raw material cost could be reduced and they could face price competition in international markets.
- Financial Incentives: – These type of incentives are been provided by the banking sector where interest charged for working capital requirement to export sectors are relatively low as compared to other sectors.
There are 2 Types of Financial Incentives provided by the banking sector: –
- Interest Subsidy: – Exporters required funds at pre-shipment as well as post-shipment time. Export sector in India is been provided subsidy on interest at which working capital can be borrowed by exporters at a concessional rate. Also, Credit risk insurance is a major incentive that are been provided by ECGC to exporter in respect of risk taken by them. This measure helps Indian Exporter to reduce the working Capital Cost of export operation.
- Financial Assistance Scheme for Agriculture, Horticulture and Meat Exports: – India majorly promotes exportation of products from agriculture, horticulture sectors and meat products. Export promotion Authority APEDA (Agriculture and processed food products export development authority) provides following financial assistance to small scale exporters
- Development of Infrastructure
- Packaging Development
- Quality Control
- Upgradation of meat plants
- Export promotion and market development
- Feasibility surveys
- Data base upgradation
- Organisation building and human resource development
- Air Freight Assistance for export of horticultural and floricultural products
Export Incentives in the form of Fiscal or Financial Incentives play a major role in rendering Indian exports, competitive in the international market. Nowadays, every country in the world makes effort to increase their exports for which policy of incentives are been practiced by them also thus covering both developed as well as developing countries.
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