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CMA Final · Indirect Tax Laws and Practice

Export Promotion Schemes under Foreign Trade Policy: CMA Final Paper 19

Export promotion schemes are benefits the Foreign Trade Policy gives exporters, such as duty-free inputs under Advance Authorisation, concessional capital goods under EPCG, and duty remission under RoDTEP and RoSCTL. To solve questions, identify the scheme, check its condition (export obligation, eligibility, IEC), then state the benefit and the consequence of default.

What this chapter covers

This chapter covers how India promotes exports through the Foreign Trade Policy (FTP). It begins with the legal base, the Foreign Trade (Development and Regulation) Act, 1992, and then moves to the schemes: Advance Authorisation, EPCG, duty remission schemes (RoDTEP and RoSCTL), export oriented units, SEZ, EHTP and STPI, and the status holder and merchant exporter provisions.

The Act gives the legal power. Under section 3, the Central Government may make provision by Order for developing and regulating foreign trade. Under section 5, it may announce and amend the foreign trade policy by notification in the Official Gazette. Section 7 requires an Importer-exporter Code Number (IEC) for imports and exports. The schemes work inside this frame.

The chapter connects closely to the rest of Paper 19. Customs questions on duty exemption, warehousing and drawback overlap with it. GST questions on zero-rated supplies, exports and refunds also overlap. Treat the schemes as the policy layer that sits on top of customs and GST. Note that MEIS and SEIS appear in the syllabus list but have been discontinued, so treat them as historical.

Questions from this chapter test whether you can apply a scheme to a given exporter. They can come as a 2-mark MCQ on a condition or benefit, or as a short descriptive answer on eligibility, obligation and default. The content is rule-based and finite, so careful preparation turns it into dependable marks. It also strengthens your customs and GST answers, because the same facts about exports, duty and refunds appear there.

Export Promotion Schemes under Foreign Trade Policy: topics in the order to study them

  1. 1Foreign Trade Policy under FT(D&R) Act, 1992It is the legal base, covering sections 3, 5, 7, 8 and 11, and every scheme depends on it.
  2. 2Advance Authorisation SchemeIt is the core scheme for duty-free inputs and teaches export obligation, which you reuse in EPCG.
  3. 3EPCG SchemeIt follows naturally, since it also works on an export obligation, now applied to capital goods.
  4. 4Duty Remission Schemes: RoDTEP and RoSCTLThese work differently, as remission of embedded taxes rather than duty-free import, so study them after the authorisation-based schemes to see the contrast.
  5. 5Export Oriented Units, SEZ and EHTP/STPIThese are area or unit based regimes, so they are easier once you know the scheme-based benefits.
  6. 6Status Holders and Merchant Exporter ProvisionsThese are the closing provisions, and they link the earlier schemes to exporter category and trading practice.

How to prepare Export Promotion Schemes under Foreign Trade Policy

This chapter is rule-heavy, so build it as a comparison table in your own notes and revise it often. Always use the latest FTP and ICMAI material for figures and conditions.

  1. Read sections 3, 5, 7, 8 and 11 of the FT(D&R) Act in plain words and note what each one does.
  2. For each scheme, write four lines in your notes: who is eligible, what the benefit is, what the obligation is, and what happens on default.
  3. Make one comparison sheet with the schemes as columns and these four points as rows. Revise it daily in the last week.
  4. Keep RoDTEP and RoSCTL separate from the authorisation schemes. Note that they are remission of taxes, not duty-free import.
  5. Solve past MCQs and case questions, and for each answer name the scheme, the condition and the consequence.
  6. Practise writing short answers in a fixed order: provision, condition, benefit, default consequence.
  7. Check the current rates, lists and scheme status in the latest FTP and notifications before the exam, because they change.

Common mistakes in Export Promotion Schemes under Foreign Trade Policy

  • Treating the FT(D&R) Act as background and skipping its sections.

    Fix: Learn sections 3, 5, 7, 8 and 11 in plain words. They are the legal base and easy to test.

  • Mixing up the penalty range in section 11.

    Fix: Remember: minimum ₹10,000, maximum five times the value of the goods, services or technology, whichever is more.

  • Confusing duty-free import schemes with remission schemes.

    Fix: Ask one question: does the exporter import free of duty, or get embedded taxes remitted? Advance Authorisation and EPCG are the first; RoDTEP and RoSCTL are the second.

  • Writing the benefit but forgetting the obligation and default consequence.

    Fix: For every scheme, always state the condition and what happens if it is not met.

  • Presenting MEIS or SEIS as live schemes.

    Fix: State clearly that they have been discontinued and are historical.

  • Quoting rates and lists from memory or old notes.

    Fix: Verify against the latest FTP and notifications, and write only what you are sure of.

Last-day revision: Export Promotion Schemes under Foreign Trade Policy

  • Section 3 lets the Central Government make provision by Order for developing and regulating foreign trade.
  • Section 5 lets the Central Government announce and amend the foreign trade policy by Gazette notification.
  • Section 7: no import or export without an IEC, with a services and technology proviso.
  • For services or technology, the IEC is needed only when the provider takes FTP benefits or deals with specified services or technologies.
  • Section 8 allows suspension or cancellation of the IEC after a written notice and a reasonable opportunity to represent.
  • Section 11(2): penalty of at least ₹10,000 and up to five times the value of the goods, services or technology, whichever is more.
  • Section 11(3) covers forged, tampered or materially false documents, with the same penalty range.
  • Section 11(8) makes goods and conveyances liable to confiscation, and section 11(9) allows release on redemption charges equal to market value.
  • Advance Authorisation and EPCG both rest on an export obligation.
  • RoDTEP and RoSCTL are remission schemes, not duty-free import schemes.
  • MEIS and SEIS are discontinued and are historical.
  • Always check current FTP conditions before writing figures.

Export Promotion Schemes under Foreign Trade Policy practice questions

Export Promotion Schemes under Foreign Trade Policy in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Export Promotion Schemes under Foreign Trade Policy: frequently asked questions

Which Act gives the legal base for the Foreign Trade Policy?

The Foreign Trade (Development and Regulation) Act, 1992. Under section 5, the Central Government may formulate and announce the policy by notification in the Official Gazette, and may amend it in the same way.

Is an IEC always needed to export?

Under section 7, no person can import or export except under an Importer-exporter Code Number. For services or technology, the IEC is necessary only when the provider takes FTP benefits or deals with specified services or technologies.

What is the penalty for contravening the FTP under the Act?

Under section 11(2), the penalty is at least ₹10,000 and up to five times the value of the goods, services or technology concerned, whichever is more. Goods may also be confiscated under section 11(8).

Can the IEC be suspended?

Yes. Section 8 allows suspension or cancellation after a written notice and a reasonable opportunity to represent. Section 11(7) also allows suspension of the IEC until a penalty is paid or recovered.

Should I study MEIS and SEIS?

Only briefly. Both have been discontinued, so treat them as historical and focus on the live schemes.