The Hindu Business Line : DEPB substitute to be more scientific

THE proposed new alternative scheme tentatively titled "Cumulative NonVATable Duty Neutralisation Scheme," for the existing Duty Exemption Pass Book (DEPB) scheme, which has to be wholly WTO compatible, is now under discussion between the ministries of commerce and finance.

Advocating a "Focus-China" approach to boost Indian exports in the near future, Mr Samir Kumar Ghosh, Chairman of the multi-product Capexil, told newspersons here on Friday that the alternative scheme to DEPB was based on remission of cumulative indirect duties, which are not VATable, but still borne by domestic exporters.

He said the three duties and levies identified for neutralisation (full rebate) under the proposed scheme are: sales tax on petroleum products; electricity duty on power sold to end users; and central sales tax on the inputs which cross State borders.

Commenting on the merits of the proposed scheme, Mr Ghosh said it takes out the element of subjectivity in fixing the rates as it is based on a scientific approach of reimbursement of cumulative indirect duty incidences, ensures more WTO compatibility and will be easy to implement and expand into new products. He said the new scheme will be in addition to the existing duty drawback scheme.

Anticipating a manifold increase in export business (including joint ventures) with China, the council, according to Mr Ghosh, has suggested to the Commerce Ministry to give serious thought to promote a `Focus-China' project for achieving specific results.

The council has also suggested that the present criteria of minimum participation of five exporters for grant of Market Development Assistance (MDA) for certain sectors be removed. It is also suggested that the FBT incurred on promotional expenses to be incurred by exporters be exempted or else be factored into the proposed new duty neutralisation scheme.

Suggesting that export of minerals, particularly to China, could be ramped up substantially, he said there was a need to upgrade the level of technology now available to raise productivity, recovery and quality to international standards. Accordingly, the council has asked for creation of a Rs 500-crore Mineral Upgradation Fund on the lines of the Tech Upgradation Fund for the textile and jute industries.

Pointing out that Capexil has been able to maintain an export growth of over 20 per cent during April-August 2005 ($2.67 billion against the $2.13-billion in the previous period), Mr Ghosh said the council, based on the current trend, was hopeful of achieving the targeted $8 billion (Rs 35,000 crore) exports by March 31, 2006.

This worked out to an annual growth of 15 per cent.

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