The Hindu Business Line : FIEO expects clarifications on DEPB benefits

THE exporting community, seeking a hassle-free environment to double exports to $150 billion in the next five years, is hopeful of a favourable response from the Government in the forthcoming Budget to its repeated demand for clarifications on DEPB benefits.

The trade also expects some new measures from the Government, especially on transportation and finance charges, to neutralise the disadvantages arsing out of rising transaction costs for exporters.

Talking to Business Line from his office in the Capital, Mr O.P. Garg, President of the Federation of Indian Export Organisations (FIEO), said he was hopeful of income-tax clarifications regarding DEPB (including the word `DEPB' in section 28 Para III (a)), so that the authorities cannot harass small and medium exporters, and extending I-T benefits to the SSI handicrafts export sector.

He said it has been amply clarified by the Government that the DEPB benefit merely entailed reimbursement of Customs duty and was not a subsidy. The four duty-free options now available for export promotion are Advance Licence, Duty Drawback, Duty Free Replenishment Licence (DFRC) and Duty Entitlement Pass Book (DEPB).

The I-T department, according to Mr Ramu Deora, former President of the FIEO, is now forcibly asking exporters to deposit notional tax dues, and is not willing to recognise DEPB as a substitute for DBK or advance licence. He felt while trade policies have clarified the issue, the enabling I-T amendments in the Finance Act never took place.

Mr Garg said at present, after the phase-out of Section HHC benefits for exporters, the tax benefit is confined to the wooden handicraft segment. Citing the tax sops given to units in special economic zones and export-oriented units, he said it becomes extremely difficult for small exporters to set up shop in such zones to avail themselves of the benefits. Instead, he suggested, the government may think of extending such I-T benefits to handicrafts clusters across the country.

Mr Garg also pointed out that a FIEO delegation headed by him, at its recent meting with the Prime Minister, has been assured of all support measures to reduce transaction costs (ranging between 5 and 11 per cent) for exporters.

One way of reducing the cost disability for exporters, he felt, is by neutralising un-refunded taxes and duties, reducing high cost of credit, power and other transaction costs. The transaction cost for Chinese exporters is less than 1 per cent, he added.

He said export-led economic growth is bound to create more employment in the country, and this has been recognised by the UPA Government.

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