Commerce Ministry has asked exporters to “keep their fingers crossed” on their demand for extension of the DEPB, a tax neutralisation scheme on exports, beyond June 30.  With the Revenue Department making it clear that the window of the Duty Entitlement Pass Book (DEPB) would close from June end, the exporters are lobbying hard with both the Commerce and Finance ministries for continuation of the sops.
“Exporters across different sectors are very disturbed…as nothing parallel (alternative) scheme is being given,” Chairman of CII’s National Committee on Exports Sanjay Budhia said.

Representatives of business chambers and export promotion councils met Commerce Secretary Rahul Khullar last week, who asked them to “keep their fingers crossed” as it is up to the Revenue Department to take the final call, an official said.

Under the DEPB, exporters are rebated to the extent of 8-10 per cent of their shipment value in lieu of local taxes in line with the government thinking that the “exports should be zero rated (without domestic levies)”. The government spends Rs 8,000 crore per annum on DEPB which has been in vogue for the last 14 years.

The Federation of Indian Export Organisations ( FIEO )) has also sought time from Finance Minister Pranab Mukherjee to present exporters’ case for extension of the export incentives.

Budhia said exports which grew sharply by over 37 per cent in fiscal 2010-11 may not increase with the same pace in the current year as the India has to compete with China where cost of capital is far less with better infrastructure.

Asked how an incentive of less than USD two billion (Rs 8,000 crore) could make such a difference to the export value of USD 246 billion, he said “Export margins are in single digit 6-7 per cent. It is a volume game”.

Budhia, who is a leading exporter of engineering goods, said while the government was not able to usher in tax reforms through Goods and Services Tax (GST), it is ending the DEPB. At least it should have waited for the introduction of GST.

Ideally, DEPB should be co-terminus with the foreign trade policy, that is till 2014, he said.

“We have already contracted for three years. They (buyers) will leave us,” he said.

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