The promotion of exports is used by many countries as a substitute for stimulating exports of goods and services. As a result, the trade between the countries is stabilized.
An export promotion council is an organization established by the government to promote and facilitate export firms’ overseas trade and global presence. Furthermore, these councils promote government schemes like data stores and market studies overseas. Non-profit organizations, these councils perform advisory and executive functions. Providing quality products abroad reflects the reputation of the country. Furthermore, they ensure that each export meets international standards.
What are the benefits of export promotion councils?
In 2019, India achieved the rank of 18th largest exporter in the world, but only contributed 1.72% of total exports on the global market. Due to the high demand for goods and services provided by the country, export promotion councils have been established to increase exports. Further, it is pertinent to promote the export for the following reasons:
- Earn foreign exchange: Due to the freedom of trade barriers, the increased import bills, and the growing global competition, every country wants to be recognized on the global market. In this position, many developed countries rely on the International Monetary Fund (IMF) and World Bank for financial assistance. The repayment of loans and import bills must be made in foreign exchange, which is possible through higher exports.
- Motivating organisations to export: Government incentives facilitate export, reducing exporters’ tax burdens and allowing them to sell competitively priced products. However, these incentives must comply with WTO norms. Exporters can, for example, import duty-free inputs needed to manufacture their export products under duty exemption schemes.
- Import capital goods: In addition, Export Promotion Capital Goods Scheme lets you import capital goods at a concessionary rate and subject to appropriate export obligations
- Balance of Trade: A balanced trade is only possible if exports exceed imports.
- Repay Foreign Loans: India owes USD 570.0 billion in foreign loans as of March 20, 2021. In order to repay the loans, export promotion policies are imperative. A higher foreign exchange rate will help to repay the loans.
- Self-reliance: A major goal of the nation is self-reliance. By increasing exports, foreign exchange can be raised.
Which promotion councils are important?
The Federation of Indian Export Organisations is the apex body of all Export Promotion Councils. Here are the EPCs for respective goods and services exports:
- Apparel export promotion council: Agricultural & Processed Food Products Export Development Authority
- Pharmaceuticals & Cosmetic Export Promotion Council for basic chemicals and pharmaceuticals
- Council for Carpet Export Promotion
- Indian Cashew Export Promotion Council
- Export Promotion Council for Chemicals and Allied Products
- Board of Coffee
- Coated coir board
- Board for Coconut Development
- Council for the Promotion of Cotton Textiles
- Export Council for Leather
- Council for Engineering Export Promotion
- EOUS and SEZ Export Promotion Council
- Export Promotion Council for Electronics and Computer Software
- Handicrafts Export Promotion Council
- Council for the Promotion of Gem and Jewellery Exports
- Export Promotion Council for Handlooms
- Silk Export Promotion Council of India
- Oilseeds and Produce Exporters Association (IOPEA)
- Council for the Development and Promotion of Jute Products (JPDEPC)
- Authority for the development of marine products
- India’s Project Exports Promotion Council
- Council for the Promotion of Plastics
- Development of powerlooms. Council for Export Promotion
- Export Promotion Council for Pharmaceuticals
- The rubber board
- Export Promotion Council for Services
- Council for Shellac Export Promotion
- The Spice Board
- Council for the Promotion of Sports Goods
- The Synthetic & Rayon Textile Export Promotion Council
- Board of Tea
- TEPC (Telecom Equipment and Services Export Promotion Council)
- Board of Tobacco
- Council for the Promotion of Wool and Woollen Exports
- Council for the Promotion of the Wool Industry
How do councils function?
The major functions of Export Promotion Councils are outlined below:
- Promoting exports: International trade fairs, buyer-seller meetings assist in introducing new exporters.
- Assistance in incentive schemes:
The councils assist exporters in taking advantage of the incentive schemes announced in Foreign Trade Policy. For exporters, they issue Registration-cum-Membership Certificates (RCMCs).
- Expanding market: EPC assists exporters in consolidating their product lines and expanding their markets through branches and offices in foreign countries.
- Strengthen relations: Delegations visit important countries to strengthen relations and expand export business.
- Timely information: They provide exporters with regular updates on the latest trends and export opportunities in international markets.
- Liasoning: The council’s liaison with the trade communities to identify their issues and needs and represent their interests to government.
- Assist in policy making: The councils collect export data regarding their specific product categories and provide it to the government to enhance trade policies.
- Assist exporters: Councils assist exporters with technology upgrades, product/service quality improvements, design improvements, innovation, etc.
Benefits reaped from the councils:
- In facilitating buyer-seller interactions, councils help exporters gain access to international markets. Most of the benefits are reaped by small and medium businesses who lack the resources to approach international buyers.
- EPC members benefit from the government’s various incentive programs.
- The councils also collect data on exports and imports from their members, building a database for the government and exporters to use. The report provides insight into the international market.
- Organizing foreign tours allows exporters to interact with buyers and expand their businesses.
While India has a huge population and a diverse range of domestic products, its domestic market is relatively small. Foreign markets demand more domestic goods than domestic markets. In this case, export promotion increases export rates and boosts the economy of certain countries. Moreover, export markets may help reduce the effects of the recession at home. Foreign exchange is essential for a country to maintain its competitiveness in the market. Export promotion makes all of these possible.