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Service Export Essentials: A Comprehensive SEIS Guide

Service Export Essentials: A Comprehensive SEIS Guide
rohit
Rohit23 May 2024

India’s service export industry is booming and how.  As of 2023, India's service exports soared by an impressive 11.4%, outpacing China and hitting a remarkable $345 billion!

A major driver of this exponential growth is the Indian government's proactive strategy to boost exports. Recognizing the potential of the services sector, the government launched initiatives like the Service Exports from India Scheme (SEIS) to give Indian service exporters a competitive edge in the global market. So, without much ado, let’s dive into the what, why, and who of SEIS.

Understanding SEIS and Its Importance for Service Exports

SEIS, or its full form, Service Exports from India Scheme, was introduced by the Directorate General of Foreign Trade (DGFT) on April 1, 2015. It's a reward-based incentive program designed to boost India's service exports.  In this blog, we will be breaking down the details of what these rewards and incentives are, what are the eligibility criteria for availing SEIS,  how you can apply for the scheme, and more.  You can also find the detailed guidelines for this scheme in Chapter 3 of the Free Trade Policy 2015-20. 

Exploring the Benefits of SEIS

The Service Exports from India Scheme (SEIS) supports service exporters by granting them Duty Credit Scrips. These scrips are certificates issued by the government that exporters can use to pay various taxes and duties associated with exporting services from India. The value of these scrips is 3% or 5% of the exporter’s net foreign exchange earnings—the total foreign exchange earned by an exporter minus all expenses incurred.

For example, if a service exporter’s net earnings are Rs. 10,00,000 for a particular order, they can receive Duty Credit Scrips worth Rs. 30,000 to Rs. 50,000, depending on the type of export services.

These Duty Credit Scrips can significantly reduce the cost of exporting services by covering various customs duties and taxes, thereby boosting profit margins. Since the scrips are based on foreign exchange earnings, they also provide a buffer against foreign exchange risks and uncertainties in international trade.

Eligibility Criteria for SEIS Participation

Here are the eligibility criteria for exporters to register themselves for the SEIS scheme:

Eligibility Criteria for SEIS Participation
  • Minimum Earnings
    To qualify for SEIS, companies must have foreign exchange earnings of at least USD 15,000 per year. For individual exporters and sole proprietorships, the required earnings are USD 10,000 per year.
  • IEC
    The exporter (service provider) must have a valid and active Import Export Code (IEC) at the time of application and when the export activities took place. It is a unique 10-digit alphanumeric number required for export activities.
  • Deemed Foreign Exchange
    RBI has mandated that if a service provider has received payment for specified services in INR, the payment is recorded as being received in the deemed foreign exchange. For example, if an exporter has received funds in INR for exporting goods in the US, the payment will be considered in USD. The list of specified services is mentioned in Appendix 3E
  • Manufacturer of Goods
    If the service provider is also the manufacturer of the goods exported, then the net foreign exchange earnings are considered for the service sector only. 

Note that if you receive foreign remittances against the following activities, you will not be eligible for SEIS:

foreign remittances against the following activities, you will not be eligible for SEIS
  • Loan repayment receipt
  • Foreign equity issued via GDRs/ADRs
  • Monetary gains from export proceeds of clients
  • Issuance of foreign currency bonds 
  • Gifts, donations, or equity participation 

Here is a detailed table with major services and rates of rewards under the SEIS scheme: 

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