Utilization and factors of non-utilization of export incentives: a cross sectional empirical study of Indian exporters

The current study aims to evaluate the utilization of export incentives of the Indian Government. A model conceptualizing the relationships between incentive’s awareness, utilization, perception of utilization on export increase and overall performance was tested.

In total, 107 Indian exporters from the ten major exporting sectors of the Indian economy were chosen. The exporters within the sectors were chosen on the basis of the quota sampling technique. The top-most executive of the exporting house was interviewed using both structured questionnaire and in-depth method.

Results indicated that awareness impacted availing of incentives which led to the perception of enhanced export sales. Enhanced export sales led to the perception of an enhanced overall performance of the firm. Smaller firms believed more as compared to larger firms in the effect of export incentives on export sales growth. Recommendations have been provided to remove lacunae in various incentive schemes and improve utilizations.

The inability to extract firm-level financial data of the value of various schemes availed, exports sales increase, overall performance indicators is a limitation of the study.

The lack of awareness seemed to be the biggest roadblock for the Indian Government to make export incentive schemes successful. The Indian Government needs to customize the offerings of incentive schemes by incorporating the general perceptions of experts/users. Some less-used schemes can be done away with and some new schemes with less paperwork will be more useful.

There is scant literature in the Indian context on the study of export incentive schemes. There is even less empirical primary evidence available. This study is one of the first to provide a model for the utilization of export schemes and has great practical relevance for exporters and Indian Government alike.