Utilization and factors of non-utilization of export incentives: a cross sectional empirical study of Indian exporters
| DOI | https://doi.org/10.1108/JABS-09-2015-0155 |
| Date | 12 December 2017 |
| Published date | 12 December 2017 |
| Pages | 434-450 |
| Author | Shivendra Pandey,OP Wali,Rajan Chandra |
| Subject Matter | Strategy,International business |
Utilization and factors of non-utilization
of export incentives: a cross sectional
empirical study of Indian exporters
Shivendra Pandey, OP Wali and Rajan Chandra
Shivendra Pandey is
based at the Department
of Marketing, IIM Rohtak,
Rohtak, India. OP Wali is
based at the IIFT, Delhi,
India. Rajan Chandra is
Guest Faculty of
International Marketing
and International Trade
Law and Practicing
Lawyer at the Supreme
Court of India, New Delhi,
India.
Abstract
Purpose –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.
Design/methodology/approach –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.
Findings –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.
Research limitations/implications –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.
Practical implications –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.
Originality/value –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.
Keywords Qualitative research, Performance, Exports, Models, Government efficiency
Paper type Research paper
Introduction
The Balance of Trade situation is a concern for Indian policymakers (Figure 1). Imports
have risen sharply as compared to exports during the 2005-2008 period leading to an
increase in trade deficit. The worrying trend however is the declining trend of authorizations
from 2006-2007 period onwards which is a cause for concern and is the focus of this study.
Further probe into the authorizations of various export promotion schemes of the Indian
Government confirmed the lack of incentive utilization by exporters which is depicted by
the declining trend or stagnation in majority of the schemes (Figure 2).
Utilization varied across various schemes during the period. The schemes which directly
enhanced margins were used more as compared to others. Business houses have been
Received 4 September 2015
Revised 5 November 2015
Accepted 31 December 2015
PAGE 434 JOURNAL OF ASIA BUSINESS STUDIES VOL. 11 NO. 4, 2017, pp. 434-450, © Emerald Publishing Limited, ISSN 1558-7894 DOI 10.1108/JABS-09-2015-0155
found to prefer short-term benefits over long-term incentives (Rolfe et al., 2004). This poses
serious questions on policy support, design of schemes and implementation process. This
has led to the investigation of all export promotion programs (EPPs) of the Indian
Government and the exploration for understanding reasons of ineffective policy initiatives.
The investigation had the dual objective of collectively stating the failure and the reasons
thereof plus commenting on individual EPPs, wherever possible.
Figure 1 Trends in trade and incentive authorizations
Figure 2 Number of authorizations under various schemes
VOL. 11 NO. 4 2017 JOURNAL OF ASIA BUSINESS STUDIES PAGE 435
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