ANNOUNCEMENT 27 Aug 2018

India has increased the allowance for free of cost export of promotion goods by State Holders.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising
Inception date: 27 Aug 2018 | Removal date: 31 Mar 2021

Tax-based export incentive

On 27 August 2018, the Indian Ministry of Commerce & Industry through Notification No 28/2015-2020 removed the absolute limit for export of goods on free of cost basis by Status Holders for export promotion. The earlier yearly limit set at Rs. 1 crore (~USD 0.14 million) or 2% of average annual export realization during the preceding three licensing years has amended to just the 2% limit. Last year, on 23 August 2017 the limit had been increased from Rs.1 million to Rs.1 crore (10 million) per year.

Since the export of goods is allowed on a free of cost basis, no export customs duty will be applicable to these goods, thereby subsidizing export promotion. The Notification states that no export incentive under any export promotion scheme will be applicable to these exports.

Within the Indian Foreign Trade Policy 2015-2020, Status Holders include business leaders, firms with high contribution to international trade and firms with high export contributions (at least USD 3 million per year). The list of such firms currently lists more than 5700 status holder firms.

The goods included in this intervention are the ones that are subject to an export duty under the Second Schedule of the Indian Customs Act.

On 31 March 2020, the Ministry of Commerce and Industry announced that the existing Foreign Trade Policy, which was to expire on 31 March 2020, will be extended till 31 March 2021.