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The Cotton Textiles Export Promotion Council has urged the Government to reduce the quantum of value addition and simplify the process to avail duty concession under the Advance Licensing Scheme.
Urging the Government to cut the value addition to five per cent from 15 per cent, the Council said the need for high level of value addition is discouraging exporters from using the scheme.
Introduced in 1976 with an objective to provide exporters with basic inputs at competitive price, the scheme allows exporters to reclaim duty, if they manage to add value of 15 per cent to the imported raw material. Exporters usually provide bank guarantee worth the value of import duty and get to reclaim them once they export the finished product.
RK Dalmia, Chairman, Texprocil said the Central Board of Direct Taxes should issue a circular to ensure that the Customs department strictly adhere to the time frame of 30 days as stipulated in the Foreign Trade Policy to cancel the bank guarantee and legal undertaking after the export is completed after the value addition.
The Council has suggested that Customs should normally release the bank guarantee or legal undertaking based on the Export Obligation Discharge Certificate issued by the Regional offices of DGFT. The verification procedure of the Customs, if required, should be restricted only to confirm whether the shipping bills are genuine instead of re-opening the entire details of the shipment which happened months back, it said.
Currently, said Dalmia, exporters operating under the scheme face problems on claiming concession as it is becoming increasingly difficult to make the authorities understand that the imported raw material is used in the exported item and the quantum of value addition.
If these issues are addressed, the Advance Authorization Scheme will go a long way to achieve “Ease of Doing Business” and make raw-materials available for manufacturers at a competitive price thereby supporting the ‘Make in India’ programme, said Dalmia.
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