The Finance Ministry today finally announced the broad contours of the new drawback scheme that will come into effect from October 1, 2011. While the exact item wise rates will be notified soon, the fact is that India Inc will have to live with lower drawback rates.
Finance Secretary RS Gujral, an old hand at trade matters, today announced the new drawback scheme. Speaking with CNBC-TV18's Siddharth Zarabi, he made it clear that the new scheme had taken into consideration the concerns of India Inc. Also read: Govt announces new drawback scheme Below is the edited transcript of his interview. Also watch the accompanying video. Q: Can you take us through the new drawback scheme? A: For passenger cars, there were a couple of companies, which had taken a brand rate, there was no all industry rate. Now that brand rate has been converted to the all industry rate. For the other auto sector, whether it is the two wheelers or the commercial vehicles or the four wheelers, the calculation was done based upon the DEPB rate and DEPB rate minus the ad-hoc element. And a separate calculation was done that what would be the DEPB rate, if the present customs duty was applied. Since that was working out as less than 5.5%, we have allowed them a rate of 5.5%. So, simultaneously for the auto sector the value caps have been removed. And that would help them significantly. Q: Overall, the sense that one gets from this new scheme, the notifications are still pending, is that all items covered under the DEPB, the 1,100 items that have migrated to the new scheme will see a minor reduction in duty. Is it possible for you to quantify and hold out an assurance to industry? A: This is a fact that those, which are migrating from DEPB to drawback, there is a slight reduction because one element was the ad-hoc element. And that had to go. Second element was that if despite that, based upon the current customs duty, the DEPB rate would have been significantly lower, then we have tried to cushion that impact and say that we will stick it to 5.5%.Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
