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This article has been written by Ayushi Ajay Sharma, pursuing a Diploma in International Business Law from LawSikho. It has been edited by Zigishu Singh (Associate, LawSikho) and Smriti Katiyar (Associate, LawSikho).

Introduction

The Government of India has been taking initiatives to achieve the tag of a welfare state. While they are at it, they have set up organisations to enable Indian exporters to reach out to the global markets. The paper seeks to disperse light on the export promotion councils in India, elucidating its functions and the benefits the recipients have reaped so far.

India has always been sought after for the trade of its rich resources ranging from spices, mines, textiles, agricultural products and so on. During the pandemic, the trade sector got a boost as the country’s total exports amounted to USD 396.60 Billion in 2020-21.[1] This increase in export has to be credited to a lot of factors, export promotion being the crucial one. Export promotion is utilised by many countries in lieu of the stimulation of the export of goods and services for the respective countries. It helps to stabilise the trade between the countries.[2]

Export promotion councils are organisations set up by the government to promote and enable the export firms to enhance their overseas trade and presence in the global market. Further, these councils also promote government schemes like data stores and market studies overseas.[3] Registered as non-profit organisations, these councils undertake both advisory and executive functions. They carry the reputation of the country as they are responsible for the quality of products supplied abroad. Additionally, they ensure the international standards and norms are satisfied  for each export.

Why do you need export promotion councils?

During 2019, even though India had secured the rank of being the 18th largest exporting nation in the world, it only contributed to 1.72% of total  exports in the global market. Hence, the export promotion councils have been established to spur the export rate of the country as the goods and services provided by the country are always in demand. Further, it is pertinent to promote the export for the following reasons:[4]

1.     Earn foreign exchange: due to the liberty in trade barriers, increased import bills, rising global competition, every country wants to mark its recognition in the global market. For this position, many developed countries rely on the International Monetary Fund (IMF) and World Bank for financial assistance. To repay the loans and import bills, it is necessary that they be paid in foreign exchange which is possible through higher export.

2.     Motivating organisations to export: the government provides incentives to encourage export, which also help reduce the tax burden on the exporters and achieve a competitive pricing for their products. However, they have to ensure that these incentives coincide with the norms of WTO. For example, duty exemption schemes allow the exporters to import duty free inputs required for manufacturing the export products.

3.     Import capital goods: additionally, Export Promotion Capital Goods Scheme allows the import of capital goods at concessional rate of duty and apposite export obligations

4.     Balance of Trade: Balance of trade can only be achieved when the exports rise, exceeding the amount of imports.

5.     Repay Foreign Loans: India has an external debt of USD 570.0 billion, estimated at the end-March 2021.[5] To repay the loans, imperative policies of export promotion should be adopted. This will result in higher foreign exchange which would help the repayment of the loans.

6.     Self-reliance: one of the major objectives of the country is to achieve self-reliance. It can be achieved by way of increased exports furthering the increase in foreign exchange.

What are the important promotion councils?

Federation of Indian Export Organisations is the apex body of all the Export Promotion Councils (EPC). Following are the EPC’s for respective goods and services export:

1.     Agricultural & Processed Food Products Export Development Authority: Apparel export promotion council

2.     Basic chemicals pharmaceuticals & cosmetic Export Promotion Council

3.     Carpet Export Promotion Council

4.     Cashew Export Promotion Council of India

5.     Chemicals and Allied Products Export Promotion council

6.     Coffee Board

7.     Coir Board

8.     Coconut Development Board

9.     Cotton Textiles Export Promotion Council

10.  Council for Leather Exports

11.  Engineering Export Promotion Council

12.  Export Promotion Council for EOUS and SEZ Units

13.  Electronics & Computer Software Export Promotion Council

14.  Export Promotion Council for Handicrafts

15.  Gem and Jewellery Export Promotion Council

16.  Handloom Export Promotion Council

17.  Indian Silk Export Promotion Council

18.  Indian Oilseeds & Produce Exporters Association EPC (IOPEA)

19.  Jute Products Development and Export Promotion Council (JPDEPC)

20.  Marine Products Export Development Authority

21.  Project Exports Promotion Council of India

22.  The Plastics Promotion Council

23.  Powerloom Dev. and Export Promotion Council

24.  Pharmaceutical Export Promotion Council

25.  Rubber Board

26.  Service Export Promotion Council

27.  Shellac Export Promotion Council

28.  Spices Board

29.  Sports Goods Export Promotion Council

30.  Synthetic & Rayon Textiles Export Promotion Council

31. Tea Board

32. Telecom Equipment and Services Export Promotion Council (TEPC)

33.  Tobacco Board

34.  Wool and Woollen Export Promotion Council

35.  Wool Industry Export Promotion Council

What are the functions of the councils?

The major functions of the Export Promotion Councils are stated below: [6]

1.     Promoting exports: promotional activities like organising international trade fairs, buyer-seller meets help in putting light on the new exporters.

2.     Assistance in incentive schemes: the councils support the exporters in reaping benefits from the incentive schemes announced in Foreign Trade Policy. Further, they issue  Registration-cum-Membership Certificate (RCMC) certificates for the exporters.

3.     Expanding market: they assist the exporters to consolidate their products and expand their market through the EPC’s branches and offices opened in foreign countries.

4.     Strengthen relations: they send delegations to important countries to strengthen their relations and expand export business.

5.     Timely information: they update the exporters regularly about the latest trends, export opportunities in international markets.

6.     Liasoning: the council’s liaison with the trade communities to identify their issues and needs and collaborate to represent their issue to the government.

7.     Assist in policy making: the councils further collect data through surveys on exports regarding their specific product categories and provide the data to the government to enhance the framework of trade policies.

8.     Assist exporters:  the councils support and aid the exporters in upgradation of technology, improvement of product/service quality, design improvement, innovation, etc.

Benefits reaped from the councils:

1.     The councils help the exporters to access the international markets through the buyer-seller interactions. The maximum benefits are reaped by the small and medium businesses who don’t possess enough resources to approach international buyers.

2.     The members of the EPC’s take advantage from the various incentive schemes offered by the government.

3.     The councils also collect export and import data of its members, building a repository of information for the perusal of the government and the exporters. It provides insights on the international market base.

4.     The councils organise foreign tours to enable exporters to interact with the buyers and expand their businesses.

Registration procedure

1.     Select the export promotion council: from the abovementioned councils, exporters are required to select the respective council on the basis of goods and services they are exporting.

2.     Submission of documents: certain documents are required to be submitted, some of which are mentioned below:[7]

i)      A digital signature certificate

ii)    Copy of your Importer-Exporter Code (IEC)

iii)   Certificate issued by the Chartered Accountant to verify the export turnover.

iv) List of the directors/partners in the export business with their proof of residence

v)     A cancelled cheque

vi)   MSME certificate, if any.

3.     Submit an application: an application has to be submitted to register with the respective export promotion council. If there are multiple products pertaining to different councils, different applications have to be sent.

4.     Fee payment: the fee payment varies from council to council. Normally, they charge a nominal fee, depending upon the exports’ turnover in the particular financial year.

5.     Collect the RCMC: after registration, the members receive a Registration Cum Membership Certificate (RCMC). It enables all the members to enjoy the incentives.

Conclusion

Although India has a huge population, with a diverse range of domestic products, its domestic market is small when compared with the rest of the world. The foreign market demands more of the domestic goods than the domestic demand. Herein, the export promotion helps certain countries to increase their export rate and boost the economy. Further, the export markets might help to reduce the effects of the domestic recession. It is imperative for the country to maintain its competition in the market, which is highly feasible through larger foreign exchange. All these are possible through export promotion.

References

[1] ‘INDIA’S FOREIGN TRADE FOR JANUARY 2021’, (Ministry of Commerce & Industry, 15 February 2021) <https://pib.gov.in/PressReleasePage.aspx?PRID=1698184> accessed 14 October 2021

[2] ‘EXPORT PROMOTION AND HOW YOU CAN BENEFIT FROM IT’, (Alliance experts) https://www.allianceexperts.com/en/dictionary/export-promotion/ accessed 14 October 2021

[3] Raghav Khajuria, ‘Export Promotion Council of India, Functions & Registration Procedures’, (DRIP/C BLOG ,June 17,2019) <https://www.dripcapital.com/en-in/resources/blog/export-promotion-council-role> accessed 15 October 2021

[4] Smriti Chand, ‘12 Arguments to Justify the Need for Export Promotion in India’, (YOUR ARTICLE LIBRARY) <https://www.yourarticlelibrary.com/exporting/12-arguments-to-justify-the-need-for-export-promotion-in-india/5907> accessed 15 October 2021

[5] ‘India’s External Debt as at the end of March 2021’, (Reserve Bank of India) https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=51819 accessed 15 October 2021

[6] ‘Export Promotion Councils: Showcasing India to the World’, (COGOPORT, 2 August 2021) <https://www.cogoport.com/blogs/export-promotion-councils-showcasing-india-to-the-world> accessed 15 October 2021

[7] ‘Export Promotion Council in India: How to Register?’, (Amazon, 25 April 2021) <https://sell.amazon.in/grow-your-business/amazon-global-selling/blogs/export-promotion-councils-in-india> accessed 15 October 2021


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