All About Export Incentive Schemes in India

Guess what? The Indian government likes you. Yes, if you are an exporter, there are multiple schemes you can take advantage of. 

Why are they there? Because you bring in foreign exchange. Also, exporting is expensive. So it’s also a way for the government to empower Indian exporters so that they don’t have to overprice their goods and can actually compete in the global market.

These schemes help ease the cost of production, logistics, taxes, and a lot more.  

Want to know more about these? Well, then, just keep reading. 

Understanding Export Incentive Schemes

Export incentive schemes are financial benefits that the government offers to exporters in order to promote their business. These incentives mainly aim to help businesses compete in global markets and bring foreign currency into the country.

Why are export incentive schemes important?

Benefits, and benefits, both for you and for the nation as a whole—that’s what these schemes bring to the table. 

Let’s see what some of these benefits are:

• Improve the competitiveness of Indian products in global markets
• Promote the growth of export businesses
• Help you, the exporters reduce the overall export cost
• Help you set competitive prices in the global market

Multiple bodies govern these schemes. Let’s take a look at what they have to offer now, one by one. 

1. Advance Authorisation (AA)

The Advance Authorisation Scheme lets exporters import raw materials without paying duties as long as those materials are used in making products for export. 

This includes not just the main inputs but also packaging materials, fuel, oil, and catalysts—basically, anything that gets used up during production.

To decide how much of each input an exporter can import duty-free, the government follows predefined norms that consider how much material is typically used (and wasted) in the manufacturing process. 

These norms, called Standard Input-Output Norms (SION), are set by the Directorate General of Foreign Trade (DGFT) for different industries. If a company finds that the standard norms don’t fit its production process, it can request custom norms (ad-hoc norms) instead.

This scheme is available to both manufacturer exporters (who make the goods themselves) and merchant exporters (who sell exported goods but get them produced by a third-party manufacturer).

• Who can apply? Manufacturer-exporters or merchant exporters with a supporting manufacturer.
• Minimum Value Addition: Generally 15%. But may vary for certain products as mentioned in Appendix 4D of the AA scheme, like:
  • Gems and Jewelry
  • Tea
  • Spices
• Validity: Inputs must be imported within 12 months from the issuance of the advance authorization, and the final product must be exported within 18 months.
• Basis: Standard Input-Output Norms (SION) or self-declaration.

Example: A textile exporter importing specialized dyes duty-free under AA can significantly lower production costs and improve competitiveness in international markets.

2. Duty-Free Import Authorisation (DFIA)

The DFIA scheme is similar to the Advance Authorisation (AA) Scheme, but instead of providing duty-free imports before exports happen, it applies after the exports are completed. 

Essentially, exporters first pay all the duties while importing raw materials, manufacturing and exporting the final product, and then getting a refund for the Basic Customs Duty they initially paid. 

However, unlike AA, it does not exempt other duties like IGST or compensation cess—only the Basic Customs Duty is refunded.

If your business has predictable export volumes, this scheme ensures you recover duty costs after completing exports.

• Who can apply? Merchant exporters (mentioning their supporting manufacturer)
• Minimum Value Addition: 20%
• Validity: 12 months from issuance
• Key Benefit: You get a Duty Credit Scrip post-export, which is freely transferable

Actionable Tip: If you deal in high-value exports like electronics, leveraging DFIA can improve cash flow management and streamline costs.

3. Export Promotion Capital Goods (EPCG)

The Export Promotion Capital Goods (EPCG) Scheme helps businesses import capital goods at zero customs duty to boost manufacturing quality and competitiveness. These capital goods can be used at any stage—before, during, or after production. Plus, if you're exporting physical goods, you’re also exempt from IGST and Compensation Cess.

Not looking to import? No problem—you can source capital goods from the domestic market under FTP guidelines (Paragraph 5.07).

What Counts as Capital Goods Under EPCG?

• Machinery and equipment used in production (as defined in Chapter 9 of FTP)
• Computer systems and software that are essential to capital goods
• Spare parts, moulds, dies, jigs, fixtures, tools, and refractories (all crucial for production efficiency)
• Catalysts (used in chemical processes) for the first charge and one replacement
• Who can apply? Any exporter
• Export Obligation: Six times the duty saved within six years from the date of issue of Authorisation
• Option: Refund-based benefits through Post-Export EPCG
• Bonus: Exports under other schemes count toward your obligation

Real-world Impact: A furniture manufacturer using EPCG to import automated woodworking machines can increase production efficiency and improve global market reach.

4. Interest Equalization Scheme (IES)

Disclaimer: This scheme ended on 31st December 2024. Exporters have been demanding further extension but there has been no news of this yet. 

The Interest Equalisation Scheme (IES) helps exporters by reducing the interest rates charged by banks on pre-shipment and post-shipment Rupee Export Credit. Launched on April 1, 2015, it was originally planned for five years but later extended until March 31, 2024. The goal? To make financing cheaper for exporters at key stages of their trade cycle.

How Does It Work?

• Exporters get a 3% interest rate reduction on Rupee Export Credit for 416 identified tariff lines
• MSME manufacturer-exporters get a higher 5% rate reduction across all export sectors (since November 2, 2018)
• Merchant exporters were included from January 2, 2019, getting 3% interest relief on pre- and post-shipment Rupee export credit for the 416 identified tariff lines at 4 digits and to all MSME manufacturer exporters for all export lines

Who Implements It?

The Reserve Bank of India (RBI) oversees the scheme, working with commercial and cooperative banks. The Directorate General of Foreign Trade (DGFT) and Department of Commerce (DoC) set the policy and reimburse the banks for the interest subvention provided to exporters.

Why Is This Important?

• Exporters can opt for an upfront interest rate reduction directly from their bank
• Banks offer reduced-rate credit, and the government reimburses the interest difference through RBI
• If you're an exporter, this scheme helps reduce your financing costs, improving your cash flow and competitiveness. If you're a researcher, studying its impact can shape better trade policies for the future.

5. Market Access Initiative (MAI) Scheme

The Market Access Initiative (MAI) Scheme is designed to boost India’s exports by helping businesses enter new markets and strengthen their presence in existing ones. 

This export promotion scheme follows a product-focused country approach, meaning it tailors support to specific industries and target markets based on research and trade surveys.

Who Can Benefit?

The scheme provides financial assistance to a wide range of organizations involved in trade promotion, including:

• Export Promotion Councils & Trade Promotion Organizations
• Government Departments & Indian Missions Abroad
• Commodity Boards & Industry Clusters
• Registered Trade Bodies & Recognized Artisan Groups
• National Institutions (IITs, IIMs, NIDs, NIFT, Universities, and Research Labs)
• Individual Exporters (for statutory compliance purposes)

What Does the Scheme Cover?

If you're looking to expand internationally, MAI funding can help with:

• Marketing Projects Abroad: Participation in trade fairs, exhibitions, and buyer-seller meets
• Capacity Building: Training and skill development for exporters
• Support for Statutory Compliances: Assistance with certifications and international trade regulations
• Market & Trade Studies: Research on demand trends and new export opportunities
• Project Development: Initiatives aimed at improving export infrastructure
• Foreign Trade Facilitation: Developing online platforms to ease trade processes
• Support for Cottage & Handicrafts Units: Special assistance for small-scale and traditional artisans

Why is MAI Important?

If you're an exporter, this scheme helps you enter global markets with reduced financial risk. It ensures you have the necessary support to meet international standards, market your products effectively, and grow your exports sustainably.

6. Duty Drawback (DBK)

The Duty Drawback Scheme (DBK) helps exporters recover some of the costs incurred during the export process, particularly customs and excise duties paid on raw materials and inputs. This rebate ensures that Indian exports remain competitive in global markets.

The scheme comprises three categories:

• All Industry Rate
• Brand Rate
• Drawback on re-export of imported goods

Key Benefit of the Scheme

• Rebates on Customs and Central Excise Duties for imported or excisable materials used in manufacturing exported goods
• Reduces overall production costs, making exports more profitable

Who Can Claim Duty Drawback?

To qualify for a refund, you must meet these criteria:

• You must be the legal owner of the goods at the time of export
• You must have paid customs duty on the imported goods
• The exported goods must have been previously subject to import duties

Why It Matters for Exporters

If you're exporting goods, the Duty Drawback Scheme can lower your costs and improve your profit margins. By reclaiming duties paid on inputs, you can offer competitive prices in international markets and expand your business more effectively.

7. Refund of Duties and Taxes on Exported Products (RoDTEP)

The Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme ensures that hidden taxes and duties on exported goods are refunded. 

These taxes, which are not otherwise credited or reimbursed, can increase export costs. RoDTEP helps neutralize this burden, making Indian exports more competitive.

What Does It Cover?

• Central, State, and local taxes that remain embedded in exported products
• Indirect taxes on goods and services used in production
• Duties and levies related to the distribution of exported goods

How Does It Work?

• The Department of Commerce introduced the scheme, while the Department of Revenue administers it
• Effective from January 1, 2021, RoDTEP applies to all eligible exports
• Refunds are issued as transferable e-scrips, which can be used only to pay Basic Customs Duty

Why It Matters for Exporters

RoDTEP helps reduce export costs by ensuring you aren’t paying unnecessary taxes. If you’re exporting goods, make sure to check the RoDTEP rate schedule and claim the benefits to improve your pricing and profitability in global markets.

8. Rebate of State and Central Taxes and Levies (RoSCTL)

The Rebate of State and Central Taxes and Levies (RoSCTL) Scheme is designed specifically for apparel, garments (Chapter 61 & 62), and made-ups (Chapter 63) to help reduce export costs by reimbursing embedded taxes.

How Does It Work?

• Administered by: The Ministry of Textiles and implemented by the Department of Revenue
• Refunds are Issued as: Transferable Duty Credit Scrips, which are stored digitally in an electronic ledger on ICEGATE (Indian Customs Portal)

Why It Matters for an Exporters

If you're in the textile or apparel industry, RoSCTL ensures that hidden state and central taxes don’t eat into your profits. With a fully digital process, claiming benefits is seamless, making Indian textile exports more competitive globally.

Take Advantage of All These Schemes With Bluno

That was a log of schemes, wasn’t it? But guess what; there are more. Not just that, the different government bodies keep changing, updating, and scrapping schemes constantly. So, how do you keep yourself updated while also determining which ones you are eligible for?

To be frank, it’s a lot of work. It will only end up bogging you down and keeping you from engaging in more meaningful business activities. That’s why Bluno’s here to save the day. We keep track of each and every export initiative and make sure your business gets all the benefits that it qualifies for. 

For such easy export-related profits and more compliance handling, try Bluno today.