Amendment to SEIS, EPCG by DGFT to boost exports

Deepak Kumar

Making a positive amendment in the Services Exports from India Scheme (SEIS), and giving the much needed boost to the exporters, the government on Friday said all payments which have been received in foreign exchange but paid in Indian Rupees (INR) for services rendered to a foreign liner will be treated as receipt in Deemed Foreign Exchange as per the guidelines of Reserve Bank of India. These services are entitled for issuing awards.

The latest announcement, made by the Ministry of Commerce and Industry, would be applicable to the services with effect from April 1, 2015.

The benefit will also be extended to all the payments procured by a foreign entity for services included in rental of vessels with crew.

“Payments which have been received in foreign, but paid in Indian Rupees (INR), including through its agents in India out of the amount remittable to the overseas principal, or out of remittances to be sent by the overseas buyer, for services rendered in Customs Notified Areas to a foreign liner shall be eligible for issuing rewards under the SEIS,” the Directorate General of Foreign Trade (DGFT) said in a statement.

However the notification, excluded vessel related charges for inland and coastal vessels and cargo related charges for coastal cargo, coastal containers and coastal empty containers from the reward scheme.

The reward rate of SEIS scheme is based on net foreign exchange earned on services based on Foreign Trade Policy (FTP) 2015-20 guidelines. The present reward rates are 3% and 5%. According to the FTP 2015-20, SEIS is applicable to Special Economic Zones (SEZs).

Export Obligation under EPCG Scheme

In another move the government on Friday issued a notification, charting out the list of services for which payment can be issued in Rupee terms and could be used against discharge of Export Obligation (EO) under the Export Promotion Capital Goods (EPCG) Scheme.

According to the new notification, all payments received in foreign exchange, but paid in Indian Rupees (INR), for services rendered in Customs notified areas would be considered as deemed to be received in foreign exchange and deemed to be earned in foreign exchange.

The Commerce Ministry said these payments shall be counted towards discharge of export obligation, which will be effected from April 1, 2015 under EPCG scheme.

Giving out further information, the Directorate General of Foreign Trade said, “Services provided in respect of vessel related charges for coastal and inland vessels and Cargo related charges in respect of coastal cargo, coastal containers and coastal empty containers will not be counted for discharge of EO under EPCG Scheme.”

The notification, however, said payments which are received in Rupee terms and can be counted towards discharge of Export Obligation under the EPCG will be exempted from the scheme.

Exporters had been struggling to comply with the export obligation (EO) issued under Export Promotion Capital Goods (EPCG) scheme and the duty exemption scheme.

EPCG authorisations can be extended by two years through a public notice, and this doesn’t require exporter to seek any endorsements.

Exporters had for long been requesting the government to take some concrete steps in this regard after India’s merchandise exports fell for the 16th straight month in March.