Further extension of DEPB: Com Min may approach FM again

Pitching for a longer extension of the DEPB for exporters beyond September 30, Commerce Ministry officials contend that bringing the curtains down on the scheme will involve gigantic paper work, which requires more time.

Following hard lobbying by exporters, supported by the Commerce Ministry, the Revenue Department has extended the Duty Entitlement Pass Book (DEPB) scheme up to September-end. It was scheduled to end on June 30. The government spends about Rs 8,500 crore on the DEPB.

While on paper, the DEPB neutralises the import duty on raw materials for export items, even those using domestic contents are given the flexibility to avail of the benefit, making it the popular among the exporting community.

While exporters have been given a choice to avail of import tax neutralisation through an alternative scheme -- Duty Drawback -- they do not find the option as attractive as DEPB. The rates, as well as coverage under duty drawback, are much less than in the DEPB.

 The Commerce Ministry officials have also indicated they would have to carry out calculations to shift exporters from the DEPB to duty drawback.

"This is a big exercise. It is impossible to complete it in three months. We will again take up the issue with the Finance Ministry," a source said.

The Federation of Indian Export Organisations (FIEO) also said the transition from the DEPB to duty drawback requires about 9-12 months' time.

"The DEPB scheme should continue till Goods and Services Tax (GST) is introduced as it will not be possible to fix the drawback rates for all the products in three months. So the Finance Ministry should extend it further," FIEO President Ramu Deora said.

The government is trying to implement GST from next year.

Commerce Secretary Rahul Khullar had said the DEPB was being extended so that there could be a smooth transition to the duty drawback scheme. 

 The lion's share of about 60% of the funds under the DEPB goes to exporters in the chemical and engineering sectors.

Finance Secretary Sunil Mitra had said that an official committee will decide as to what extent the exporters can be compensated when they shift from the DEPB to an alternate duty drawback scheme.The government would save about Rs 4,000 crore after the scheme comes to an end. 

Khullar has asked exporters to give their feedback and justify their demand for new drawback rates. 

During April-May, 2011-12, India's exports increased by 45.3% to USD 49.8 billion in value terms.