Exporters expect govt to retain sops amidst tough going

Exporters' body FIEO today asked its members not to panic over discontinuation of the DEPB tax neutralisation scheme after September 30, as it is working with the government to find a solution.

"We are trying to convince the government that the rates of tax refunds under the alternate scheme should not be kept much below the level presently being given to exporters," Federation of Indian Export Organisations (FIEO) President Ramu Deora said here.

Exporters receive incentives equivalent to 8-9% of their merchandise shipments under the 14-year old Duty Entitlement Pass Book (DEPB) scheme. The Finance Ministry has given the scheme a final extension till September 30, after which exporters will have to get tax refunds through other schemes like duty drawback.

However, the reimbursement of import duty on inputs for exports is not as lucrative under the duty drawback scheme as the DEPB. The government has appointed a high-level committee to suggest a viable alternative to the DEPB.

Deora, who met the committee headed by Saumitra Chaudhary, Member of the Prime Minister's Economic Advisory Council, said, "The current rates should be continued till at least Goods and Services (GST) tax is introduced."

The FIEO chief said he was confident that the committee would retain incentives for exports, which have shown impressive growth despite problems in Western markets.

The government spends about Rs 8,500 crore annually on the DEPB and the amount is likely to be reduced by half following its.

"The global market is bad... There is uncertainty in the US and there are payment problems in Europe. The impact may be seen from the third quarter of the current fiscal," he said.

However, he advised the exporting community to maintain aggression in the world market. 

"There is no cause for a panic.... We are sure exporters would get government support," he said. 

During April-June this fiscal, exports grew by 45.7% to USD 79 billion.