Policy : Foreign trade promotion schemes, STPI, SEZ


IMPORTER EXPORTER CODE (IEC)



Update on FTP

  1. India lost the case against United States of America (USA) in World Trade Organisation (WTO).
2. USA alleged that India is violating the provisions of Subsidies and Countervailing Measurers Agreement (SCM) by giving export rewards to its exporters in form of various schemes.
3. India needs to withdraw all the export schemes where it is rewarding the exporters through various schemes like Merchandise Export from India Scheme, Export Promotion Capital Goods, Special Economic Zone, Duty Free Imports for Exporters, EOU/BTP/EHTP Schemes etc.
4. SCM doesn’t permit the countries to give rewards to exporters where the per capita income is more than USD 1000 consecutively for three years. India has crossed this threshold in Year 2015. In 2017, the WTO notified that India’s GNI was $1,051 in 2013, $1,100 in 2014 and $1,178 in 2015.
5. However, India has filed an appeal against this decision with WTO appellate tribunal and the bench is not working due to lack of quorum.
6. It is pertinent to note that Service Export from India Scheme and Advance Authorisation Scheme has not been challenged by USA.
7. Indirect tax rebate schemes, drawbacks are allowed if these does not exceed to amount of such taxes actually levied on inputs that are consumed in the production of the exported product.
Then what is the fate of these export incentive schemes?
    Government of India has announced scheme of 
    Remission of Duties and Taxes on Exported Products (RoDTEP)
    to compensate the exporters.  It will allow reimbursement taxes and duties paid by them such as value added tax, coal cess, mandi tax, electricity duties and fuel used for transportation, which are not getting exempted or refunded under any other existing mechanism but are incurred in the process of manufacture or distribution of exported products. It seems to be India government is doing its own preparation before the decision of tribunal by giving cabinet approval to this scheme on 13th March, 2020.
    RoDTEP seems to be replacement of Merchandise Export from India Scheme (MEIS) that was found to violate the World Trade Organization Rules. However, picture will be clearer once the draft of scheme come into existence.

  Covid -19 Impacts
Notification – 57/2015-20,
Public Notice No. -67/2015-20 and
Trade Notice No. 60/2019-20 (All dated – 31st March, 2020)
  FTP Validity extended to more one year i.e. 31st March, 2021
  RCMC validity extended from 31st March, 2021 to 30th September, 2020
  SEIS for FY 2018-19 can be filed upto 31st December, 2020
  For SEIS for FY 2019-20 – Service Category and rate of scrips to be notified separately
  SEIS for FY 2020-21 – Decision on continuation to be taken subsequently

Governing act of Foreign Trade Policy 2015-2020 is The Foreign Trade (Development and Regulation) Act, 1992.(Hereinafter Referred As ‘FTDRA, 1992’)
  However, India has lost case against USA in WTO and the fate of all export incentive schemes are in danger. Fortunately, SEIS scheme has not been challenged by USA
  Let us understand about the Service Export from India Scheme in Frequently Asked Questions (FAQ) format.
  What is ‘Service’? (Para – 9.50)
  “Service” Includes all tradable services covered under General Agreement on Trade in Services (GATS) and earning Free Foreign Exchange
  The GATS define services in four ‘modes’ of supply: cross-border trade, consumption abroad, commercial presence, and presence of natural persons.
  Who is a ‘Service Provider’ Under Foreign Trade Policy 2015-20?
As per Para 9.51 of FTP, Service Provider means a person providing:
      (i)            Mode1- Cross border trade - Supply of a ‘service’ from India to any other country e.g. BPO/KPO/ITES services, consultancy etc.
    (ii)            Mode 2- Consumption abroad - Supply of a ‘service’ from India to service consumer(s) of any other country e.g.: tourism, educational services, medical treatment etc.
   (iii)             Mode 3 – Commercial Presence - Supply of a ‘service’ from India through commercial presence in any other countrye.g.: banking, hotel etc.
  (iv)            Mode 4- Presence of natural persons - Supply of a ‘service’ from India through the presence of natural persons in any other country like doctor, nurse, IT engineer etc. functioning as a consultant, employee, from one country to another. 
  SEIS benefit is available for Mode 1 and Mode 2 only.
  SEIS benefit is not available for Mode 3 and Mode 4.


Reward Rates:
  As per Appendix 3D of Foreign Trade Policy 2015 - 20, reward rates for various services are as follows: -
  What are the eligibility criteria for claiming rewards under SEIS?
  Services rendered should fall under the definition of “Service” of “Foreign Trade Policy
  Service Provider should have minimum Net free Foreign Exchange Earnings of US$ 15,000 and individual service providers and sole proprietorship US $ 10,000 in year of rendering service
  Service provider must have active IEC Code at the time of rendering of services
  Who are not eligible for claiming rewards under SEIS?
As per Para 3.09 of FTP, SEIS benefit is not allowed if the Foreign exchange remittances/sources of earnings in form of
  Other than those earned for rendering of notified Services would not be counted for entitlement.
  any other inflow of foreign exchange, unrelated to rendering of services, etc.
  Export turnover relating to services of units operating under EOU / EHTP / STPI / BTP Schemes or supplies of services made to such units.
  Related to Financial Service Sector – Foreign remittance earned through
  Export Proceeds Realization of Clients
  Issuance of Foreign Equity through ADRs/GDSRs or other similar instruments
  Issuance of Foreign Currency Bonds
  Raising all type of Foreign Currency Loans
  Sale of Securities and other Financial Instruments
  Other receivables not connected with services rendered by financial institutions
  Equity or debt participation.
  Receipts of repayment of loans.
  Donations.
  Earned through contract/regular employment abroad (e.g. labour remittances)
  Export of goods
  Clubbing of turnover of services rendered by SEZ / EOU/ EHTP/ STPI/BTP units with turnover of DTA Service Providers
  Payments for services received from EEFC Account;       
  Foreign Exchange earnings for services provided by Airlines, Shipping lines service providers plying from any foreign country X to any foreign country Y routes not touching India at all
  Service providers in Telecom Sector
  How to calculate Foreign Exchange Earnings (FEE)?
*Net Foreign Exchange Earnings = Gross Earnings of Foreign Exchange – Total Expenses/Payment/Remittances of Foreign Exchange by the IEC holder, relating to service sector in the Financial Year           
What is the effective date of scheme?
    The Rewards under MEIS/SEIS shall be admissible for exports made/services rendered on or after the date of notification of this policy.
  What is the last date of filing of application for Duty Scrips ?
  For SEIS, the last date for filing application shall be 12 months from the end of relevant Financial year of claim period.
  However, if you are late – Than don’t worry – DGFT is very much liberal, they will give you incentive with a late filing cut. Incentive will be given as per below table: -
  SEIS claim cannot be filed beyond 31stMarch 2022 for the FY 2018-19. In nutshell, a person can file claim within 3 years of end of financial year.
  For example if a Service Provider applied for SEIS within 6 months of expiry of due date, he will get 98% of the eligible claim but if applied with a more delay than the claim amount will get reduced to 95% to 90% depends upon when he has applied.
  Let us understand by an example – For the FY 2018-19, due date for filing application for reward under SEIS scheme is 31stMarch 2020
  If claim is filed after 31stMarch 2020 but before 30thSeptember 2020 – He is eligible for 98% of rewards.
  If claim is filed between 1stOctober 2020 to 31stMarch 2021 – He is eligible for 95% of rewards
  If claim is filed between 1stApril 2021 to 31stMarch 2022 – He is eligible for 90% of rewards

Government Proposal in 2020 and going forward
  • Proposal to discontinue SEIS as it has not helped India in "increase shipments positively".
  •  Proposal to discontinue this SEIS in its current form. There is view that it has not helped us to increase our exports positively,
  • He said that industry has to get out of the mind set of subsidies as they are detrimental to India's long-term interests.
  • Only 2200 Companies take that take that subsidy. Some of them are such large names, making 1000s of crores of rupees of profit, that there is no business of giving them a subsidy," he said.
  • The minister wondered that if those big companies do not get this subsidy, will they stop providing those services.
  • He suggested that the subsidy can be used to promote sectors like tourism."...tourism...has huge untapped potential... which are the areas where we need targeted support for a defined time frame to get better value addition," he added.























Where SEIS Scrip Can be Used?

In payment of taxes like customs duties, excise duties, service tax on the procurement of services, exchange duties and other.

Scrips cannot be utilized for payment of GST.

Scrips are transferable.

There is no GST on sale of scrips.
   What is the validity of the Scrips?
   These credit Scrips are valid for a term of 24 months from the date of its issuance.(Public Notice No. 33/2015-2020 dated 23.10.2017)
    Issuing hard copy of physical duty credits scrips had been discontinued w.e.f. 10.04.2019 and made it online for easy of doing business as per Trade Notice No.03/2015-2020 dated 03.04.2019
  What are the points to be Ponder?
  Directorate General Foreign Trade (DGFT) Headquarter randomly select 10% of cases through computer system for each Regional Authority (RA) where scrips have already been issued, under each scheme.
  Documents to be maintained for the period of three years from the issuance of scrips as Regional Authority may ask for original proof of landing certificate, annexures attached to the application form or any other document.
  Government views on SEIS –
Commerce Minister Piyush Goyal Proposes to discontinue export incentives for services exports under SEIS in present form

  • Proposal to discontinue SEIS as it has not helped India in "increase shipments positively".
  •  Proposal to discontinue this SEIS in its current form. There is view that it has not helped us to increase our exports positively,
  • He said that industry has to get out of the mind set of subsidies as they are detrimental to India's long-term interests.
  • Only 2200 Companies take that take that subsidy. Some of them are such large names, making 1000s of crores of rupees of profit, that there is no business of giving them a subsidy," he said.
  • The minister wondered that if those big companies do not get this subsidy, will they stop providing those services.
  • He suggested that the subsidy can be used to promote sectors like tourism."...tourism...has huge untapped potential... which are the areas where we need targeted support for a defined time frame to get better value addition," he added.



Foreign trade policy for 2015-2020 


The government has unveiled its foreign trade policy (FTP) for five years from 2015 to 2020 on 1st april 2015.

 Unveiling the policy, Commerce Minister Nirmala Sitharaman said the new policy would boost exports and create jobs while supporting the Centre’s 'Make In India' and 'Digital India' programmes. “Export obligation under the export promotion capital goods scheme will be reduced by 25% to promote domestic manufacturing."
FTP would focus on defence, pharma, environment-friendly products and value-added exports, she said, adding: “The govt will continue to incentivise units located in special economic zones... With a focus on employment-creating sectors, the government will promote e-commerce."

Later in a series of tweets, Sitharaman said the latest FTP was introducing two new schemes — "Merchandise Exports from India Scheme (MEIS) and "Services Exports from India Scheme (SEIS). Under MEIS, a higher level of support would be provided to processed and packaged agricultural and food items. And, agricultural and village industry products would be supported across the globe at the rates of 3% and 5%.