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Exporters on edge as govt maintains silence on DEPB
December, 29th 2006

Star-category exporters are getting jittery about the fate of the duty entitlement pass book (DEPB). The question before them is that will the government finally scrap it as scheduled, or will another scheme come in its place?

Exporters are pitching for the scheme to continue, arguing it is a time-tested and proven scheme.

Shri B S Meena, Director-General of Foreign Trade, attended two separate sessions with exporters but remained non-committal. His reiterated the known stand that the government is eager to create a favourable climate for exports.

The government reintroduced the DEPB schemewhich allows draw-back of import charges on inputs used to make export productsin the foreign trade policy of 2004-09. But in April 2005, commerce minister Kamal Nath announced that DEPB would be replaced by another scheme within six months. The government let the scheme continue beyond this period. But it finally declared that the scheme would be withdrawn from March 31, 2007.

Sanjay Budhia, CIIs national chairman for foreign trade, told FE that finance minister P Chidambaram and commerce minister Kamal Nath jointly held a meeting with the export promotion councils and the Federation of Indian Export Organisations on December 18.

The exporters demanded that if DEPB is to be replaced with a new scheme, then it should be announced at least six months before the date of withdrawal.

According to Budhia, exports are done with a long-term plan and prices are quoted to customers factoring the duty drawback in the cost. If Indian exports have to be made competitive, the pricing factors should be known in time.

Although exports are growing, they account for only 1% of total global exports. Exports are expected to cross $130 billion by March 2007 against a target of $120 billion. Till November, exports were worth $80 billion, a growth of 35%. Exports should hit the target of $150 billion by 2009, Meena said.

Rakesh Shah, chairman of the Engineering Export Promotion Council, said costs relating to Vat, octroi, mandi tax and port charges should factor within the DEPB. The DGFT should come out with solution on pending issues of FBT and service tax on export.

LEND ME YOUR EARS
Exporters: Let the scheme continue as it is a time-tested and proven one Govt: We are always eager to create a significantly favourable climate for exports
EXPORTERS INTEREST
The scheme allows the draw-back of import charges on inputs used to make export products
THE HISTORY
In April 2005, Kamal Nath announced that DEPB would be replaced by another scheme within six months
Later the government declared that the scheme would be withdrawn from March 31, 2007
EXPORTERS DEMANDS
New policy should be announced six months before DEPB withdrawal
Come out with solution on issues of FBT and service tax on export

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