In India, export promotion is crucial to promoting economic growth, generating jobs, and reducing trade deficits. India can diversify its revenue sources, draw foreign investment, and improve its worldwide competitiveness in the increasingly interconnected global economy by encouraging and assisting domestic firms to investigate international markets.
Many nations and regions utilise export promotion to advertise their company's products and services internationally. The trade balance and the nation's economy will benefit from this. Incentive programs for export promotion may also be used to entice more businesses to export. Governments accomplish this by helping with marketing, product development, payment guarantee programs, pre-shipment and post-shipment funding, trade missions, training, trade shows, and international representation. The growth of exports is crucial for the company and the economy as a whole. For the benefit of the economy, government actions often try to increase the nation's export performance overall.
Such measures assist exporting businesses in several ways. Only those industries that can grow and compete with overseas rivals are promoted through export promotion strategies. Since international trade is the main objective, competition arises, which in turn corrects the returns to scale.
Did you know? In recent decades, India has emerged as a significant exporter, which has helped the Indian economy soar to new heights. The quantity of goods exported from India has increased dramatically, and the market is currently more extensive than ever.
What Are Export Promotion Councils?
The government of India established groups called export promotion councils (EPCs) to support and aid Indian exporters by opening up access to foreign markets, promoting Indian goods through various initiatives, and boosting overall exports from India. Each nation has its export promotion groups to carry out this function.
Roughly 37 groups in India offer services to exporters of various product categories. This categorisation improves the emphasis on product promotion and enables EPCs to support exporters more effectively.
Types of Export Promotion Councils
In India, various export promotion councils (EPCs) are established to address the unique needs of various export items. Every product category, such as electronic goods, clothing, food products, etc., has specific regulations and export-related obstacles.
Thus, the corresponding export promotion councils assist exporters in overcoming such challenges and boosting exports.
The different types of export promotion councils can be seen as a link between the government and exporters, coordinating with each party to increase exports. The councils are established as non-profit entities under the Companies Act/Societies Registration Act.
Some export industries also have export development authorities and commodity boards in addition to these councils.
The main purpose of export promotion policies is to promote India as the chosen country for exporting goods and services of the highest calibre. To do this, the EPCs act as the export promotion companies (EPCs) for India and its exporters on the global markets.
EPCs must assist exporters in locating new markets, diversifying their export portfolio, and concentrating exports to current export destinations.
On the other hand, by offering information about the challenges exporters face in foreign markets, they also assist the government in formulating effective trade policy. The EPCs are autonomous organisations with separate operational and decision-making authority.
However, all EPCs must abide by any laws and bylaws that the Central Government creates or updates occasionally.
Let us look at the different types of export promotion councils.
1. EEPC India - Engineering export promotion council of India
EEPC India has served as the face of Indian engineering exports for 67 years, during which time the country's exports of engineering goods increased from $10 million in 1955 to $112 billion in 2021–22. The Union Ministry of Commerce and Industry regards EEPC India as the benchmark EPC in India.
The leading body in India for trade and investment promotion is EEPC India. It serves the Indian engineering industry and is funded by the Ministry of Commerce & Industry, Government of India.
2. Project Exports Promotion Council of India (PEPC)
The Government of India established the Project Exports Promotion Council of India (PEPC) in 1984 (then known as the Overseas Construction Council of India).
In accordance with the Foreign Trade Policy of the Government (of India), PEPC not only implements the necessary export promotion initiatives but also offers Indian Civil and Engineering (EPC) construction, including process engineering contractors and consultants - in the public or private sector - the necessary technical information, guidance, and support.
3. Basic Chemicals, Pharmaceuticals and Cosmetics Export Promotion Council (Chemexcil)
The Ministry of Commerce & Industry of the Government of India established the Basic Chemicals, Cosmetics & Dyes Export Promotion Council, or CHEMEXCIL, in 1963, intending to foster exports of the following goods from India to other foreign nations. These have been divided into four different panels as follows:
Panel I - Dyes and Dye intermediates
Panel II - Basic organic and inorganic chemicals, including agrochemicals
Panel III - Cosmetics, soaps, toiletries, and essential oils
Panel IV - Specialty chemicals, lubricants, and castor oil.
4. Chemicals and Allied Products Export Promotion Council (CAPEXIL)
The Indian Ministry of Commerce established CAPEXIL, the Premier Export Promotion Council, in March 1958 to encourage the export of chemicals and related products from India. And has served as the Indian business community's voice ever since.
CAPEXIL has over 4500 members nationwide, with its home office in Kolkata and regional offices in New Delhi, Mumbai, Kolkata, and Chennai. The enormous diversity of products that CAPEXIL deals with is one of its most intriguing features.
The main objective of CAPEXIL, a passionate supporter of exporters to the government, is to offer export aid to its member exporters.
5. Council for Leather Exports (CLE)
The Indian leather and leather products business is robust and expanding quickly, and the Council for Leather Exports (CLE) is the country's top organisation for promoting international commerce. To increase India's contribution to the global leather trade, CLE is dedicated to advancing the overall progress of the Indian leather industry and achieving stronger export growth.
The Ministry of Commerce & Industry, Government of India, oversees CLE. It is the recognised export promotion agency for the entire leather and leather goods sector.
6. Sports Goods Export Promotion Council (SGEPC)
The Sports Goods Export Promotion Council (SGEPC), a government-sponsored organisation, promotes India's exports of toys and sporting products. SGEPC, established in 1958, represents India's top producers and exporters of toys and sporting products.
The Committee of Administration (COA) oversees SGEPC and comprises elected officials from the Indian business community and two government members. The Chairman, Vice-Chairman, and Regional Director oversee the COA. SGEPC's primary goal is to encourage the export of toys and sporting goods from India.
7. Gem and Jewellery Export Promotion Council
Since 1966, India's export-led expansion in the gem and jewellery industry has been fueled by the Gem & Jewellery Export Promotion Council. The Council has its national headquarters in Mumbai and regional offices nationwide, with over 7,500 members.
8. Shellac Export Promotion Council
In 1957, SEPC (Shellac Export Promotion Council) was established with support from the Ministry of Commerce & Industry, Government of India, to promote the export of shellac and lac-based goods from India.
Following a name change, SEPC became SHEFEXIL (Shellac & Forest Goods Export Promotion Council), which now promotes 860 distinct goods with 2140.94 US$ Million in exports in 2018–19.
9. Cashew Export Promotion Council of India
The Government of India created the Cashew Export Promotion Council of India (CEPC) in 1955 with the cashew industry's active assistance to boost exports of the kernels of cashew nuts and cashew nut shell liquid from India.
By the way, it is set up, the Council offers the institutional framework required for carrying out the various tasks designed to increase and promote the export of cashew nutshell liquid and cashew kernels.
The Council acts as the intermediary between overseas buyers and member exporters of cashew kernels. The Council members are informed of inquiries from overseas importers.
10. The Plastics Export Promotion Council
A non-profit organisation registered under section 8 of the Companies Act, 2013, the Plastics Export Promotion Council (PLEXCONCIL) was created by the Ministry of Commerce & Industry, Department of Commerce, Government of India on July 15, 1955. It was one of a number of Export Promotion Councils (EPCs) established by the government to promote India's image overseas as a trustworthy source of high-quality goods and to increase exports from the nation.
The leading organisation for the plastics sector in India is called PLEXCONCIL, and it represents more than 2,500 exporters who produce and sell goods made of plastic, from raw materials to semi-finished and finished goods.
11. Export Promotion Council for EOUs & SEZ Units (EPCES)
The Government of India's Ministry of Commerce & Industry established the Export Promotion Council for EOUs & SEZs (EPCES) to meet the export promotion requirements of the nation's EOUs & SEZs. To promote increased competitiveness in the Indian EOUs & SEZ sector, EPCES has facilitated meetings between many stakeholders over the years, including businesses, policymakers, banks, financial institutions, and multilateral organisations.
The only scheme-specific and multi-product council, EPCES, represents important industrial sectors like textiles, apparel and yarn, gem and jewellery, leather goods, pharmaceuticals, food and agro products, information technology, electronics and software, and chemicals, engineering, minerals, granites and other stones, plastic and rubber products, among others.
12. Pharmaceutical Export Promotion Council of India (Pharmexcil)
The government of India has designated the Pharmaceutical Export Promotion Council of India (Pharmexcil) as the official organisation for promoting pharmaceutical exports from India. The Ministry of Commerce and Industry established it in May 2004 in accordance with the terms of the Foreign Trade Policy.
Its scope includes various pharmaceutical items, including bulk medications, formulations, biotech products, Indian systems of medicine, herbal products, diagnostics, clinical research, etc.
13. Indian Oil Seeds & Produce Export Promotion Council (IOPEPC)
Indian Oilseeds and Produce Export Promotion Council (IOPEPC), formerly known as IOPEA, has been serving the needs of exporters for more than a decade. It is dedicated to the development and promotion of oilseed and produce exports.
By encouraging farmers, shellers, processors, surveyors, and exporters to improve the quality of oilseeds in India, the Council focuses on exports and strives to strengthen the domestic supply chain.
14. Services Export Promotion Council
The mission of the Ministry of Commerce and Industry's Services Export Promotion Council is to enhance international commercial possibilities for India's services sector. The following are SEPC's broad functions and responsibilities since its founding in 2006.
To open up new business options for both established and aspiring service exporters.
To serve as a forum between the government and business to offer policy suggestions, tackle business concerns, and offer knowledge on international markets (both established and developing) regarding opportunities, difficulties, and regulatory frameworks.
Factors that Enhance the Need for Export Promotion in India
There are various factors for which India needs export promotion. Let us discuss some crucial factors that enhance the need for export promotion in the country.
1. To Gain Foreign Currency
Every nation globally strives to gain a piece of the world market. This is because trade barriers have been lowered since the World Trade Organisation (WTO) was established, import costs have gone up, and there is more international competition on the domestic market.
Most developing nations also rely on sources like the World Bank, the International Monetary Fund (IMF), and others to finance their development initiatives and close their balance of payment deficits. Therefore, import invoices and international loans must be repaid in foreign currency. The key to doing this is to generate foreign exchange through various export-related activities.
2. To Encourage Organisations to Export
Governments provide specific incentives to encourage organisations to export and earn valuable foreign currency. These incentives assist exporters in lowering their tax obligations and achieving a competitive pricing edge for their goods in international markets.
However, as a WTO member, each nation must ensure that the incentives it provides don't give exporters an unfair advantage. Therefore, no nation can discriminate against or grant special commercial advantages to another; instead, they must all stand on an equal footing and benefit from any efforts to reduce trade barriers.
Additionally, all export incentives must adhere to WTO rules and numerous principles.
3. To Advance Indian Exporters' Interests and Uphold WTO Commitments
In India, the framework for export promotion in the form of duty exemption or remission programs has been developed keeping in view both exporters' interests and the commitments India has made to the World Trade Organisation.
The Duty Exemption Scheme enables exporters to import duty-free raw materials needed to produce export goods. The Duty Remission Schemes provide for the replenishment or remission of input taxes after exports.
4. To Import Capital Goods
The Export Promotion Capital Goods (EPCG) plan also allows exporters to import capital goods with a favourable export obligation and a reduced tariff rate.
5. To Lessen Administrative Obstacles
All qualifying exporters in India can take advantage of the benefits described above. To lower administrative barriers in importing inputs for exportation and exporting final products from India, the government has also launched the extremely ambitious Special Economic Zones (SEZ) program.
These SEZs were developed using the extremely effective Chinese Economic Zones as a model. The SEZs are anticipated to be India's main growth drivers in global commerce.
6. To Improve an Unfavourable Trade Balance
Except for two years during the planning period, there has been an adverse trade balance every other year. It decreased India's foreign exchange reserves and made it challenging to meet plan objectives.
Therefore, for plans to be carried out successfully, a negative trade balance must be turned into a positive one, necessitating an increase in exports.
7. To Reduce Foreign Loans
India must borrow significant amounts of money from abroad to purchase machinery necessary for its economic and industrial growth. India had taken out foreign loans of Rs. 11, 42,618 crores as of March 2009. One day, these loans must be repaid.
An export promotion policy must be implemented to repay the principal and interest on these loans. Greater exports will result in foreign currency gains that will be used to pay back foreign borrowing.
8. To Realise the Goal of Self-Reliance
Making India independent of outside aid is one of the critical goals of the Indian Plan. Export promotion is important to accomplish this goal. A significant quantity of foreign currency can be made by speeding exports.
9. To Sell Excess Production
New industries were established in India during the planning phase. Promoting these industries' export is necessary to increase the sale of their goods. Under the export promotion program, export growth is simple.
10. To Finance Imports
Importing machinery and other capital goods from foreign countries is necessary for the plans to be carried out successfully. Growing exports to generate the necessary foreign exchange to pay their import costs becomes vital.
11. For the Defence
Essential military hardware, including guns, aircraft, and other items, are imported for our defence from developed nations. Exports must rise to cover their expense.
12. To Aid in the Nation's Economic Development
The following are some ways that export promotion through facilities and incentives might benefit the organisation:
- Foreign markets offer chances to grow and gain economies of scale when the domestic market is small.
- In many cases, such as with several Indian agricultural products, there is a surplus of supply compared to domestic demand.
- Exports allow some nations to experience export-led growth. Fourth, the impact of the home slump may be lessened through export markets.
- A nation may need to increase exports to generate enough foreign currency to pay for imports and repay foreign debt. It should be emphasised that many nations are struggling with a trade deficit plus foreign debt.
- Export promotion may be necessary, even in cases where a country has a trade surplus, to preserve its position in both the level of domestic economic activity and the competition from abroad.
Conclusion
Export commerce now plays a much larger role in driving economic growth than it did previously. Importing machinery, technical know-how, etc., is necessary to hasten economic development in emerging nations like India.
Foreign loans and aid, foreign exchange reserves and gold reserves, and export promotion are the three main sources of foreign exchange. India's foreign exchange reserves could not be sufficient to cover its outstanding foreign debt. Therefore, it cannot solely rely on this source.
Foreign loans and aid can be used to earn foreign money. However, there are several restrictions and unknowns attached to this aid.
Therefore, this source cannot be a practical way to meet the need for foreign exchange. Because of this, increasing exports is the best, safest, and most sustainable way to generate foreign currency.
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