The Hindu Business Line : Govt to extend DEPB scheme till March 31

After having announced that the DEPB scheme would be valid till September 30, the Government had extended its applicability to December 31, 2005. A replacement for the DEPB scheme has been in the works for more than a year.

The existing DEPB scheme neutralises the customs duty on the import content of the export product. This scheme serves a little over 50 per cent of the country's merchandise exports in value terms. India's merchandise exports during April-March 2005 stood at Rs 3,56,068 crore.

Sources said that the Prime Minister's Office (PMO) has advised that the existing DEPB scheme be extended to March 31, 2006. The Commerce Ministry and the Revenue Department have also been directed to work towards the early finalisation of the new scheme that would replace the DEPB scheme.

As a replacement to the DEPB scheme, the Government is keen to put in place a WTO-compatible instrument of remission that would take into account unrebated tax incidences at various levels.

One of the factors impacting the finalisation of the alternative scheme is the stance of the Planning Commission on the issue of rebating the State-level levies under the proposed scheme. The sources said that the Planning Commission is having second thoughts on whether the new scheme should rebate State-level levies.

The DEPB scheme was considered to be WTO-incompatible, as it allowed the use of domestic inputs (which are given the deemed import status) to enable exporters to draw credit for importing anything that is not in the negative list and things that do not go into the export production.

Exporters have been insisting that the basic features of the proposed scheme must be shared with them. In fact, the Federation of Indian Export Organisations (FIEO) had demanded that at least six months' notice should be given before an alternative scheme is implemented.