The Hindu Business Line : No relook at duty cut to 5 pc under Target: DGFT

On the issue of DEPB Bills verification by the customs, Mr K.T. Chacko, Director-General of Foreign Trade, clarified that some new fields may be added to the customs software to smoothen the process of verification and authentification of the shipping bills.

MR K.T. CHACKO (left), Director-General of Foreign Trade, and Mr Santosh Saraf, President, Merchant Chamber of Commerce, at an interactive session on `India's Foreign Trade - Challenges and Prospects' in Kolkata on Friday. - A. Roy Chowdhury

Kolkata , Sept. 15

Pointing out that there was no case for re-look at the cut in duty credit entitlement to 5 per cent (from April 1, 2005 to March 31, 2006) under the Target Plus Scheme (TPS), which has since ceased to exist from April 1, 2006, Mr K.T. Chacko, Director-General of Foreign Trade, said here on Friday that it was 100 per cent WTO incompatible and highly prone to misuse by the trade.

Duty credit

Retrospectively, the Government has now fixed the duty credit entitlement for incremental growth in exports to a 5 per cent, with a cap of 5 per cent on 100 per cent growth. Earlier, export houses achieving 25-100 per cent export growth were entitled to 10 per cent duty credit, and 15 per cent for growth over 100 per cent.

Speaking at an interactive session on "India's foreign trade - Challenges and prospects", organised by the Merchants Chamber of Commerce, Mr Chacko said the annual outgo for the Government on the scheme was to the tune of Rs 6,000 crore.

He felt the scheme was also prone to manipulation, as incremental export growth could easily be shown through creative accounting in the books of accounts.

DGFT notification

Explaining the late DGFT notification announcing the cut in rate retrospectively for the last one year of its existence, he said advance indication was given to the trade in the earlier Policy Handbook stating that the scheme was subject to change in rate of entitlement and eligibility at any time during the course of its tenure from April 1, 2005. This was after full consultations and agreement between the Department of Revenue and the Commerce Ministry, and not done inadvertently, Mr Chacko clarified.

On the issue of DEPB Bills verification by the customs, he clarified that some new fields may be added to the customs software to smoothen the process of verification and authentification of the shipping bills.

Responding to the plea by trade that the new incentivised focus market and products schemes have willy-nilly omitted certain key markets and products as well, the DGFT clarified that the focus necessarily was on product linkages with employment generation in mind.

Some of the sectors could be marine products, handicrafts and leather. As for the new markets, the idea was to incentivise exports to virgin areas and not those markets such as Latin America and Africa, where Indian export goods were already reaching, he pointed out.

The focus market scheme, with a certain amount of outgo factored in, will be reviewed after one year, especially while announcing the Foreign Trade Policy supplement, he clarified.

Neutralisation

On neutralisation of various duties and levies, the DGFT assured that the Government's stated position too was that duties and levies should not be exported. Conceding that 100 per cent duty neutralisation for exports was still not visible in terms of Government response, he said the Government was seized of the matter.

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