Export promotion schemes for biotech products

Introduction

Export promotion schemes for biotechnology products play an important role in strengthening India's position in the global biotechnology market. India exports various biotechnology products, including vaccines, pharmaceutical formulations, diagnostic kits, biosimilars, medical biotechnology products, agricultural biotechnology products, enzymes and research-based biological materials. These exports contribute to foreign exchange earnings, technological development, employment generation and international scientific cooperation.

The Government of India has introduced several export promotion schemes to encourage biotechnology companies, particularly small and medium-sized enterprises, to expand their international operations. These schemes operate through the Foreign Trade Policy, the Directorate General of Foreign Trade (DGFT), the Ministry of Commerce and Industry, the Department of Biotechnology (DBT), and other regulatory institutions.

Export promotion must also ensure compliance with product safety, quality standards, intellectual property rights, biosafety requirements and international trade obligations. Therefore, financial incentives cannot be separated from the regulatory framework governing biotechnology exports.

Legal framework governing export promotion

The principal legislation governing export promotion in India is the Foreign Trade (Development and Regulation) Act, 1992. It empowers the Central Government to regulate imports and exports and formulate the Foreign Trade Policy.

The Foreign Trade Policy 2023 provides the broader framework for export facilitation, duty exemptions, export authorisations and institutional support. Biotechnology exporters must also comply with the Customs Act, 1962, the Customs Tariff Act, 1975, and applicable notifications issued by the Central Government.

Important regulatory institutions include:

Directorate General of Foreign Trade (DGFT): Implements export promotion schemes and issues Importer Exporter Codes (IEC).

Department of Biotechnology (DBT): Supports biotechnology research, innovation and commercialisation.

Central Drugs Standard Control Organisation (CDSCO): Regulates applicable pharmaceutical and biological products.

Export Inspection Council (EIC): Provides export inspection and certification services where applicable.

Agricultural and Processed Food Products Export Development Authority (APEDA): Supports exports of relevant agricultural and processed products.

Major export promotion schemes applicable to biotech products

1. Remission of Duties and Taxes on Exported Products (RoDTEP)

The RoDTEP scheme was introduced to refund certain embedded duties and taxes that are not otherwise refunded or credited. Its purpose is to improve the international competitiveness of Indian exporters.

Biotechnology companies exporting eligible products may benefit from RoDTEP, subject to the applicable product classification, notified rates and scheme conditions.

For example, an Indian manufacturer exporting diagnostic reagents or eligible pharmaceutical products may claim the applicable remission when the relevant tariff classification is covered.

The scheme operates through transferable electronic duty credit scrips, subject to applicable rules. It helps reduce the cost burden associated with domestic taxes and duties that remain embedded in exported products.

2. Advance Authorisation Scheme

The Advance Authorisation Scheme allows exporters to import inputs without payment of basic customs duty, subject to specified conditions and export obligations.

Biotechnology manufacturers may use this facility to import eligible raw materials, specialised chemicals, laboratory inputs and other components required for manufacturing export products.

For instance, a company manufacturing vaccines for overseas markets may require specialised eligible inputs that are unavailable domestically. Advance Authorisation can reduce the import-related cost of such inputs.

However, the authorisation is subject to prescribed input-output norms, export obligations and actual-user conditions.

3. Export Promotion Capital Goods (EPCG) Scheme

The EPCG Scheme facilitates the import of capital goods at concessional or zero customs duty, subject to the applicable policy conditions and export obligations.

It is particularly relevant to biotechnology companies requiring expensive manufacturing and testing infrastructure.

Eligible equipment may include:

Bioreactors and fermentation systems.

Pharmaceutical manufacturing machinery.

Laboratory testing equipment.

Advanced analytical instruments.

Biotechnology processing and packaging machinery.

The scheme supports technological modernisation and improves the production capacity of biotechnology exporters.

4. Production Linked Incentive (PLI) Scheme

The Government of India has introduced Production Linked Incentive schemes to strengthen domestic manufacturing in selected strategic sectors.

The PLI Scheme for Pharmaceuticals provides incentives to eligible manufacturers based on incremental production and other prescribed conditions. Certain biotechnology-related pharmaceutical products, including eligible biopharmaceuticals and biosimilars, may fall within its notified product categories.

The scheme encourages domestic manufacturing, investment in advanced production facilities and the development of globally competitive pharmaceutical products.

However, PLI is not a universal export subsidy. Eligibility depends on the specific scheme guidelines, approved products and qualifying investment and production requirements.

5. Market Access Initiative (MAI)

The Market Access Initiative supports Indian exporters in developing international markets.

Biotechnology companies can benefit from eligible activities such as:

Participation in international biotechnology exhibitions.

Overseas business-to-business meetings.

International trade fairs.

Market research and promotional activities.

Development of international business networks.

This initiative is particularly useful for emerging biotechnology enterprises seeking international distributors, research partnerships and institutional buyers.

6. Market Development Assistance (MDA)

The Market Development Assistance scheme supports eligible export promotion activities undertaken through recognised export promotion organisations.

Biotechnology exporters may obtain indirect benefits through eligible trade delegations, international exhibitions and promotional programmes.

The scheme helps smaller businesses overcome the financial difficulties associated with international market development.

Regulatory requirements for biotechnology exports

Export incentives do not automatically exempt biotechnology companies from regulatory compliance. Exporters must satisfy applicable domestic and destination-country requirements.

Important compliance obligations include:

Obtaining an Importer Exporter Code (IEC), wherever required.

Following applicable CDSCO requirements for regulated biological and pharmaceutical products.

Complying with biosafety regulations governing genetically modified organisms and related materials.

Obtaining necessary export permissions for restricted products.

Meeting destination-country quality, labelling and product registration requirements.

Protecting patents, trade secrets and other intellectual property rights.

Complying with applicable international standards, including relevant WHO and WTO requirements.

For certain biological materials, additional restrictions may apply under environmental, wildlife, hazardous-material or strategic export-control legislation.

Important case laws and judicial principles

1. Union of India v. Kanak Exports (2016)

The Supreme Court examined the relationship between export incentives and the government's authority to formulate foreign trade policies.

The decision recognised the importance of the statutory framework governing export incentives and the government's policy-making authority. It demonstrates that exporters cannot claim incentives independently of the applicable policy conditions.

Relevance: Biotechnology exporters must satisfy the specific eligibility requirements of export promotion schemes rather than assume that every exported product automatically qualifies for financial benefits.

2. Kasinka Trading v. Union of India (1995)

The Supreme Court considered the withdrawal of an exemption notification and the doctrine of promissory estoppel.

The Court recognised that the government may withdraw an exemption in public interest, even where businesses have relied upon an earlier concession, subject to the applicable legal principles.

Relevance: Biotechnology exporters investing in manufacturing facilities based on customs exemptions must consider the possibility of policy changes. Export incentives are subject to statutory authority and legitimate public-interest considerations.

3. Shrijee Sales Corporation v. Union of India (1997)

The Supreme Court further examined the doctrine of promissory estoppel in relation to the withdrawal of governmental exemptions.

The judgment recognised that public interest may justify withdrawal of an exemption and that promissory estoppel cannot prevent the government from exercising its lawful powers in appropriate circumstances.

Relevance: Biotechnology companies cannot assume that existing export concessions will remain unchanged throughout the life of a long-term investment project.

4. Pournami Oil Mills v. State of Kerala (1986)

The Supreme Court examined the legal consequences of governmental incentives and the legitimate expectations created by exemption notifications.

The judgment recognised that businesses acting upon an announced incentive may receive protection depending on the terms of the notification and the circumstances of the case.

Relevance: Biotechnology exporters may rely upon properly notified export benefits, provided they satisfy the applicable conditions and the government has not lawfully withdrawn or modified the benefit.

5. Mangalore Chemicals and Fertilizers Ltd. v. Deputy Commissioner of Commercial Taxes (1992)

The Supreme Court distinguished between substantive conditions and procedural requirements relating to tax exemptions.

The Court emphasised that technical or procedural irregularities should not necessarily defeat a substantive entitlement where the essential conditions have been satisfied.

Relevance: Biotechnology exporters claiming duty exemptions or export-related benefits may rely on this principle when challenging the rejection of legitimate claims based solely on procedural technicalities. However, mandatory statutory conditions must still be fulfilled.

Challenges in implementing export promotion schemes

Despite government support, biotechnology exporters face several difficulties. High research and development costs, strict international regulatory approvals, expensive manufacturing infrastructure and competition from established global companies create significant barriers.

Small biotechnology enterprises may also face difficulties in understanding customs classifications, export documentation, product registration and incentive claim procedures.

Other challenges include:

Delays in obtaining regulatory approvals.

High costs of international product certification.

Complex customs documentation.

Restrictions on sensitive biological materials.

Uncertainty regarding the continuation of government incentives.

Limited access to international distribution networks.

Suggestions for strengthening export promotion

The government should simplify export incentive procedures and establish specialised assistance facilities for biotechnology exporters. Greater coordination between DGFT, DBT, CDSCO and customs authorities would reduce administrative difficulties.

Additional support should be provided for biotechnology start-ups, research institutions and small manufacturers. Investment in internationally accredited testing laboratories, cold-chain infrastructure and advanced manufacturing facilities would also strengthen export competitiveness.

India should further encourage international research collaborations, technology transfer and participation in global biotechnology exhibitions.

Conclusion

Export promotion schemes are essential for developing India's biotechnology industry and strengthening its position in international markets. Schemes such as RoDTEP, Advance Authorisation, EPCG, PLI, MAI and MDA provide financial, technological and market-development support to eligible exporters.

However, the success of these schemes depends on effective implementation, transparent eligibility requirements and compliance with domestic and international regulatory standards. Judicial decisions concerning governmental exemptions, export incentives and promissory estoppel provide important guidance on the rights and obligations of exporters.

A coordinated approach combining financial incentives, regulatory simplification, research investment and international cooperation can make India a globally competitive biotechnology export hub.