The Hindu Business Line : Export promotion bodies to raise DEPB replacement issue at review meeting

WITH less than forty eight hours to go before the Commerce Minister, Mr Kamal Nath, takes a review meeting on export performance in the current fiscal, export promotion councils are gearing up to raise, at the meeting, certain crucial issues that will have a bearing on export performance in the coming days.

Top on the agenda of many export promotion councils is the contour of the proposed scheme that will replace the Duty Entitlement Pass Book (DEPB) scheme.

The export performance review meeting is scheduled for October 18.

After announcing that the DEPB scheme will be valid till September 30, the Government had recently extended its applicability up to December 31, 2005. A replacement for the DEPB scheme has been in the works for nearly a year.

Being prepared: The exporting community is now keen to know at least the basic features of the scheme so that they can be well prepared for the appointed day of the alternative scheme.

"The exporters are still not aware of the shape that the new scheme would take. They should be informed about the proposed scheme well in advance. This would help them in doing proper costing for consignments after December 31. We will highlight this issue at the meeting," Mr Ajai Sahai, Director General of the Federation of Indian Export Organisations, told Business Line.

The DEPB scheme serves a little over 50 per cent of the country's merchandise exports in value.

India's merchandise exports during April-March 2005 stood at Rs 3,56,068 crore.

The DEPB scheme is considered to be World Trade Organisation-incompatible and hence the search for an alternative duty-neutralisation scheme.

Alternative: The alternative scheme that is being worked out may also neutralise certain local levies imposed by State governments. However, there is still a discord between the Commerce Ministry and the Finance Ministry over the issue of neutralisation of certain State-level local levies.

At the export performance review meeting, the export promotion councils also plan to highlight issues related to infrastructure problems and high power cost.

EOUs, SEZs: The Export Promotion Council for EOUs (export oriented units) and SEZ (special economic zones) (EPCES) plans to reiterate its plea, among other things, for zero-rating of supplies made to EOUs and SEZs under the new value added tax (VAT) regime.

Unlike the sales tax regime when most States exempted supplies made to EOUs/SEZs from sales tax, the VAT regime in most States requires payment of VAT on such supplies along with the facility that refund could be later claimed.

"We want all States to uniformly follow the Andhra Pradesh model. This State has already issued notification that allows zero-rating of supplies to SEZs," Mr L.B. Singhal, Director General, EPCES, told Business Line.

The VAT panel, however, believes that it may not be possible to achieve "uniformity" on this aspect even though efforts can be made for achieving similarity in procedures.

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