Incentives for export trade:
1. Trade agreements:

• State or central government enters into trade agreements with various countries. Under these agreements they agree to trade several products/services with each other.
• Such trade agreements boost exporters to increase their export business.

2. Financial and economic encouragement reward:

• Exporters are provided several financial and economic benefits to encourage them for producing and/or exporting. These encouragements include:
• Give some pre-decided reward directly to the exporter.
• Give exemption or collect very less sales tax and income tax on exported products.
• Give partial or full exemption of income-tax for income earned through export. Provide land, raw material, electricity, equipment, etc. at cheaper rates for producing goods/services for export.

3. Collective and systematic economic encouragement:

• Under this system if an exporter is able to export a pre-decided quantity of products than he is allowed to import products equivalent to the foreign exchange earned from export.
• The exporter who guarantees to export the said quantity is given several benefits as a form of encouragement. These benefits are:
• Provide land at subsidized rates for producing such items that can be exported.
• Assistance in setting up factories for producing products that can be exported. Encouragement to establish factories in free trade zones i.e. trade zones (areas) which are exempted from taxes and regulations. Oblige to export total production or as per pre-decided ratio.

4. Financial facilities and services:

• Several financial facilities and services are provided to exporters that encourage them. They are:
• Make arrangement so that the exporters receive export-bill (a document needed by customs department) on the same day of export.
• Provide ways to protect exporters against fluctuations that occurs in exchange rate of foreign currency.
• Making arrangements so that the importer or importing country can easily import goods exported to them.
• Provide services as guarantor of the importer after assessing the financial soundness of the importer.

5. Non-financial facilities:

• Exporters are also provided several non-financial facilities and services for motivation. They are:
• Provide information on export opportunities, procedures and benefits.
• Train people for producing products that can be worth exporting.
• Arranging competitions among exporters and rewarding highest exporter.
• Provide information about export market i.e. international market.
• To lock-out or create strike in factories that produce export items illegally.

6. Special economic zone (SEZ):

• A special economic zone (SEZ) refers to certain fix area of a country which enjoys special economic regulations and liberal economic laws compared to other parts of the country.
• In 2005, government of India passed law for SEZ in the parliament and brought it in force from 10th February, 2006.
• Special economic zones contain several types of zones like:
  (a) Export processing zone
  (b) Free trade zone (FTZ)
  (c) Free ports
  (d) Industrial zone
• SEZ is set-up with the aim of attracting direct local and foreign capital investment.
• Under SEZ the government provides part or full exemption of custom duty, central excise, service tax, central sales tax, security transaction tax, etc. on products produced in SEZ.

7. Export processing zone:

Indian government has established export processing zones or say free processing zones to encourage export trade. In such zones exporters can import goods, re¬process them if needed, manufacture goods and export them without interference of custom authorities. This helps in bringing more foreign earnings to our country.

• Excise duties, financial transaction regulations and some labour laws are liberal in these zones.
• Government assures people that it will provide all basic facilities such as roads, electricity, water, communication, transportation, facility to procure high quality raw material, etc. to industries set-up in such zones.
• Government also provides information on export procedures, international market, demand of products for export, political conditions favorable export, etc. to people interested in export business.
• Under its economic policy India has developed various free trade zones (FTZ) in places like Kandla, Santa Cruz (Mumbai), Falta (West Bengal), Noida, (Cochin, Chennai, Vishakhapattannam, Kosindra, (Near Dwarka) and Dahej (near Bharuch), etc.