India’s export Promotion policies have evolved from a protectionist, import-substitution framework to a WTO-compliant, facilitation-driven regime. The 1991 balance-of-payments crisis catalysed liberalisation, shifting from inward-looking controls to market-oriented incentives. Early instruments like Cash Compensatory Support and DEPB gave way to schemes such as MEIS, later replaced by RoDTEP following a WTO ruling. The Foreign Trade Policy 2023 marks a decisive pivot from incentive-based support toward ease of doing business, export facilitation, and remission of embedded taxes.
Phase 1: Pre-1991 — Import Substitution and Direct Incentives
Before 1991, India pursued an import substitution strategy with heavy licensing and high tariffs. Export promotion relied on direct cash subsidies, duty drawback, and Cash Compensatory Support, particularly after the 1966 rupee devaluation. The EXIM Policy 1985 introduced the Duty Entitlement Passbook (DEPB) scheme, enlarging duty-free import entitlements for exporters . However, these measures operated within a closed economy framework, and exports remained constrained by anti-export biases, overvalued exchange rates, and pervasive controls. Incentives were fragmented and often WTO-incompatible, treating exports as a residual sector rather than an engine of growth.
Phase 2: 1991–2000 — Liberalisation and Structural Reform
The 1991 crisis triggered a paradigm shift. The rupee was devalued by 22%, Liberalised Exchange Rate Management System (LERMS) was introduced, and current account convertibility followed in 1994 . The first formal five-year EXIM Policy (1992–97) reduced restricted export items from 439 to 296 . Export incentives moved toward duty exemption schemes, Advance Licences, and Export Promotion Capital Goods (EPCG). The focus shifted from direct subsidies to reducing anti-export bias through tariff rationalisation and exchange rate correction. Special Economic Zones were conceptualised, and export processing zones were upgraded, laying institutional foundations for later competitiveness gains.
Phase 3: 2000–2014 — SEZs, Focus Products, and Global Integration
This period saw the SEZ Act 2005, creating duty-free enclaves to attract investment and boost exports . The Foreign Trade Policy 2004–09 introduced Focus Product and Focus Market schemes, targeting specific sectors and destinations with duty credit scrips . The FTP 2009–14 responded to the global financial crisis by expanding these incentives—raising FMS from 2.5% to 3%, adding 27 new markets, and enhancing FPS coverage . Market Linked Focus Product Scheme (MLFPS) linked incentives to priority markets. Electronic Data Interchange initiatives reduced transaction costs. However, critics noted policy centralisation and neglect of manufacturers, while fiscal costs of scrips mounted.
Phase 4: 2015–2020 — MEIS Consolidation and WTO Challenge
The FTP 2015–20 consolidated five separate incentive schemes into the Merchandise Exports from India Scheme (MEIS), providing duty credit scrips at 2–5% of FOB value to offset infrastructural inefficiencies . Goals included raising India’s share in world exports from 2% to 3.5% and integrating trade policy with Make in India and Digital India. However, in 2018 the United States challenged MEIS at the WTO, which ruled it a prohibited subsidy under the SCM Agreement . This compelled India to phase out MEIS and design a WTO-compliant alternative, marking the end of large-scale direct export subsidies.
Phase 5: 2021–Present — RoDTEP and Facilitation Turn
RoDTEP (Remission of Duties and Taxes on Exported Products) replaced MEIS in January 2021, refunding embedded central, state, and local taxes rather than granting upfront incentives . Covering over 10,780 tariff lines, it aligns with WTO rules while supporting Make in India and Atmanirbhar Bharat . The FTP 2023 shifted decisively from incentive-based to facilitation-based policy, removing the five-year expiry cycle and emphasising ease of doing business, IT automation, and Districts as Export Hubs . Recent budgets signal further movement toward export insurance and trade defence, with interest subsidy schemes phased out in favour of market access and compliance support .
