Govt says more than 22,000 firms misused export incentives in 3 years

The government’s export-promotion schemes provide customs duty exemption on import of capital goods, raw material, components and consumables for manufacturing goods for exports and compensate exporters for various disadvantages they face.

Beneficiaries have to abide by terms and conditions of these schemes, which the government monitors and takes action against defaulters.

These actions range from suspension, cancellation of the authorization, black listing the defaulter from availing any export promotion scheme to imposition of fiscal penalty, cancellation or suspension of importer and exporter code number and initiating criminal proceedings.

Such penal provisions are contained in the Foreign Trade Policy/ Hand Book of Procedures, Foreign Trade (Development and Regulation) Act, 1992 and Foreign Trade (Regulation) Rules 1993.

Action against misuse of export schemes and concessions is a continuous process. Whenever such misuse is detected the firms are placed in Denied Entity List (DEL) and adjudication proceedings initiated. Investigations into such misuse are concluded within a reasonable time.

Exporters’ View

Exporters however say the government action is often unilateral and heavy handed.. "Things on the ground have remained very different than what is portrayed. The government and custom agencies use these powers to threaten or coerce exporters to toe their line. Rank unprofessional behavior from government officers has remained the norm for a long time now," a senior functionary of industry body CII said.

A leather exporter from Agra, who sells his products through a distributor registered to the Mumbai port says that any mistake in documentation is often not considered later on despite repeated attempts to get it corrected. Micro and small scale exporters find it tougher to negotiate the hurdles of bureaucracy and often falter in filing all paperwork.

This year, model guidelines to ensure timely completion of adjudication proceedings were issued to Regional Authorities of the Directorate General of Foreign Trade (DGFT) on 27 January.

"Further, the Central Economic Intelligence Bureau (CEIB) has issued an Information Sharing Protocol (ISP) under which the DGFT, CEIB, Directorate of Revenue Intelligence (DRI) & other investigative agencies share information to investigate fiscal offences which includes misuse of export schemes and concessions," the Commerce Department has said.

The Federation of Indian Exports Organization (FIEO) feels that misuse of scheme benefits remains a major challenge. "Exporters have to wait for an excruciatingly long time to finally receive the benefits of even legitimate export incentives. Often they are cancelled using various pretexts. Under such a circumstance, the proclivity towards gaming the system has become stronger," a senior functionary of FIEO said.