The Hindu Business Line : Relief for exporters sourcing indigenously

As part of its efforts to bring down transaction costs, the Department of Commerce has now held that licence holders undertaking indigenous sourcing need to furnish bank guarantees only with respect to excise duty saved and not on the "15 per cent interest" on the duty saved.

Earlier, the bank guarantee, furnished to the licensing authority by a licence holder who is doing indigenous sourcing from nominated agencies or indigenous suppliers, would have to cover both the excise duty saved and the interest (now 15 per cent) on the duty saved.

Now, the bank guarantees furnished to the licensing authority under the export promotion capital goods (EPCG) scheme/Advance release order/Advance Intermediate Licences need not be for the interest component on the duty saved. This move of the Government will encourage indigenous sourcing, informed sources said.

The Federation of Indian Export Organisations had earlier made representation to the Government that the stipulation that the bank guarantees should also cover the interest on the excise duty saved acted as a dampener and discouraged indigenous sourcing.

Exporters have been making a case for reduction in transaction costs to make the Indian exports competitive in the international markets. They argue that transaction costs need to be brought down further if Indian exports are to retain their competitive edge in the international market, especially in the current scenario of a steadily appreciating rupee.

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