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Export Promotion Schemes
Special schemes are available for setting up
Export Oriented Units for the Electronics/IT Sector.
These schemes are:
- Export Oriented Unit (EOU) Scheme
- Electronics Hardware Technology Park (EHTP)
Scheme
- Software Technology Park (STP) Scheme
- Special Economic Zones (SEZ) Scheme
- Export promotion Capital Goods (EPCG)
Scheme
- Duty Exemption and Remission Scheme
EOU/EHTP/STP Schemes
- Software developers/exporters are exempted from Customs bonding at various export promotion schemes including STP/EOU/EPZ, etc. The export obligation shall be the same value as given under the EPCG Scheme. Existing bonded units under the various Software Export Promotion schemes will also be considered under the above scheme.
- An EOU / EHTP / STP / BTP unit may export all kinds of goods and services except items that are prohibited in ITC (HS).
- EOU / EHTP / STP / BTP units may import / procure from DTA, without payment of duty, certain specified goods for creating a central facility. Software EOU/ DTA units may use such facility for export of software.
- For services, including software units, sale in DTA in any mode, including on line data communication, shall also be permissible up to 5 0% of FOB value of exports and /or 5 0% of foreign exchange earned, where payment of such services is received in foreign exchange.
STP/SEZ Schemes
- The STP Scheme has been extremely successful in fostering the growth of the software industry. The exports made by STP Units have grown many folds over the years. Today the exports made by STPI registered unit during 2008-09 are US$ 47.7 billion about 90% of total software exports from the country.
- Special Economic Zones (SEZs) are being set up to enable hassle free manufacturing and trading for export purposes.
- Sales from Domestic Tariff Area (DTA) to SEZs are being treated as physical export. This entitles domestic suppliers to Drawback/ DEPB benefits, CST exemption and Service Tax exemption.
- 100% Income Tax exemption on export profits available to SEZ units for 5 years, 50% for next 5 years and 50% of ploughed back profits for 5 years thereafter.
Benefits under STP Scheme:
- Income Tax benefits under Section 10 A & 10 B of the IT Act upto 31st March 2011.
- Customs Duty Exemption in full on imports.
- Central Excise Duty Exemption in full on indigenous procurement.
- Central Sales Tax Reimbursement on indigenous purchase against from C.
- All relevant equipment / goods including second hand equipment can be imported (except prohibited items).
- Equipment can also be imported on loan basis/lease.
- 100% FDI is permitted through automatic route.
- Sales in the DTA up to 50% of the FOB value of exports permissible.
- Use of computer imported for training permissible subject to certain conditions.
- Depreciation on computers at accelerated rates up to 100% over 5 years is permissible.
- Computers can be donated after two years of use to recognized non-commercial Educational Institutions/Hospitals without payment of duty.
- Export proceeds will be realized within 12 months.
- Units will be allowed to retain 100% of its export earnings in the EEFC account.
Export Promotion Capital Goods
(EPCG) Scheme
The EPCG Scheme allows import of capital goods
for pre-production, production and post-production
(including CKD/SKD thereof) at 5% customs duty
subject to an export obligation equivalent to
8 times of duty saved on capital goods imported,
to be fulfilled over a period of 8 years. The
capital goods shall include spares (including
refurbished/reconditioned spares), tools, jigs,
fixtures, dies and moulds. Second hand capital
goods without any restrictions on age may also
be imported under the EPCG Scheme. The export
obligation can also be fulfilled by the supply
of ITA-1 items to the DTA provided the realization
is in free foreign exchange.
Duty Exemption and Remission
Schemes
The Duty exemption schemes enable duty free import
of inputs required for export production. An Advance
Licence is issued under Duty Exemption Scheme.
A Duty Remission Scheme enables post export replenishment/remission
of duty on inputs used in the export product.
Duty remission schemes consist of (a) Duty Free
Replenishment Certificate (DFRC) and (b) Duty
Entitlement Passbook Scheme (DEPB). DFRC permits
duty free replenishment of inputs used in the
export product. DEPB allows drawback of import
charges on inputs used in the export product.
The details of these schemes are available on
the website of the Directorate General of Foreign
Trade, Ministry of Commerce & Industry ( http://www.dgft.delhi.nic.in
).
Advance Licence
An Advance Licence is issued to allow duty free
import of inputs, which are physically incorporated
in the export product (making normal allowance
for wastage). In addition, fuel, oil, energy,
catalysts etc., which are consumed/utilized in
the course of their use to obtain the export product,
may also be allowed under the scheme. Duty free
import of mandatory spares up to 10% of the
Cost, Insurance and Freight
(CIF)
value of the licence, which are required to be
exported/supplied with the resultant product,
may also be allowed under Advance Licence. Advance
Licences are issued on the basis of the inputs
and export items given under Standard Input Output
Norms (SION). However, they can also be issued
on the basis of Adhoc norms of self declared norms.
Duty Entitlement Pass Book
Scheme (DEPB)
The objective of the DEPB is to neutralize the
incidence of Customs duty on the import content
of the export product. The neutralization shall
be provided by way of grant of duty credit against
the export product. Under the DEPB scheme, an
exporter may apply for credit, as a specified
percentage of FOB value of exports, made in freely
convertible currency. The DEPB scheme will continue
to be operative until it is replaced by a new
scheme, which will be drawn up in consultation
with exporters.
Duty Free Replenishment Certificate
(DFRC)
DFRC is issued to a merchant exporter or manufacturer
exporter for the import of inputs used in the
manufacture of goods without payment of basic
customs duty. However, such inputs shall be subject
to the payment of additional customs duty equal
to the excise duty at the time of import. DFRC
shall be issued on a minimum value addition of
25% only in respect of products covered under
the SION as notified by Directorate General of
Foreign Trade (DGFT).
Foreign Direct Investment Policy for Information Technology
FDI upto 100 percent is permitted for E-Commerce activities subject to the condition that such companies would divest 26 percent of their equity in favour of the Indian public in five years, if these companies are listed in other parts of the world. Such companies would engage only in business to business (B2B) E-Commerce and not in retail trading, inter alia, implying that existing restrictions on FDI in domestic trading would be applicable to E- Commerce as well.
Major
IT and ITES Companies in India
- Tata Consultancy Services
- Wipro Technologies
- Infosys Technologies
- HCL
- Intel
- GE
- IBM
- Dell
- Microsoft
- Cisco
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