DEPB scheme may be extended for 1 more yr: Sources

The government is all set to extend the current Duty Entitlement Passsbook Scheme, or DEPB, scheme by one more year. And with just days to go for the announcement of the foreign trade policy, the government seems hopeful of clocking 100 billion dollars in exports for the current fiscal, this, in spite of the recession in the US.

The Commerce Ministry has been pressing the Finance Ministry to reimburse even state levies. Their contention is that exporters should not be burdened with any kind of levies. The Finance Ministry’s contention is that the current scheme is not WTO compliant and it is not in a position to ensure that the state refund their local levy. So, this has been a contentious issue.

Late last week, there was a meeting between Commerce Minister Kamal Nath and Finance Minister P Chidambaram, where this issue was more or less sealed informally. The extension to DEPB is for about 1 year. Sources said that for all practical purposes, there may be no replacement coming in for DEPB. DEPB in its current form may perhaps go on till the goods and services tax (GST) kicks in for 2010.

On the issue of export projection, it’s probably going to be pegged at USD 200 billion in the forth coming Foreign Trade Policy. The problem is that this is 33% up from the actual export figure of USD 150-155 billion, which the economy will clock in the fiscal that is just gone by.

Given the kind of recession that the US is in, one is not sure whether this kind of projection for exports is realistic or not. As far as the foreign trade policy is concerned, sources said that there may not be any more new schemes. There will be a merger of the existent schemes and the focused products schemes will perhaps get better coverage in better depth.