Discontinuation of the tax rebate scheme DEPB from June will make exports uncompetitive, thus affecting its growth momentum, industry body CII has said.Exporters get refund of duties on import content of their export products under which they have been given several extensions. It costs the exchequer about Rs 8,000 crore per annum.
“Withdrawal of the Duty Entitlement Pass Book (DEBP) scheme will have a serious blow to the exports growth momentum achieved in the last few quarters,” CII said.
India”s exports registered the highest ever growth of 37.5 per cent at USD 245.9 billion during 2010-11, demonstrating a robust demand for Indian merchandises both in western economies as well as in new markets like Latin America.
The 14-year-old scheme is the most popular among exporters, especially in the engineering and automobiles sectors. The tax refund mechanism was considered to be non-compliant with the World Trade Organisation rules.
Further, CII said, Indian exporters would require time and capital to develop new products, marketing strategies and refocus on emerging markets to sustain exports growth.
Thus, it is imperative that the government will continue to be sensitive to the exporters” needs to achieve the ambitious target of doubling exports to USD 500 billion by 2014.