| Government officials said the new scheme was still not being finalised since the commerce ministry was of the view that the Centre should reimburse the state levies, while the finance ministry did not support the idea, owing to revenue considerations. |
| Commerce and Industry Minister Kamal Nath had written to Prime Minister Manmohan Singh to resolve the issue. He had suggested the existing scheme should be allowed to continue in the current fiscal since the exporters would require time to adjust to the new scheme. |
| As per the recommendations of the National Council of Applied Economic Research (NCAER), the new scheme would essentially cover three duties namely, the electricity duty burden, the cost of fuels such as petrol, high speed diesel used in the captive power plants and the inter-state duty paid as central sales tax. |
| Officials pointed out that while there was agreement on the Centre bearing the reimbursement of cost of fuels and the CST, there were differences between finance and commerce ministries on who should reimburse the electricity duty. |
| "There could be a specific formula on the basis of which exporters were reimbursed for electricity," an official said. They also pointed out the reimbursement under the new scheme would be higher for the non-VAT states, compared with the VAT states, since they would not have the benefit of obtaining input credit under the VAT. |
| The DEPB, which covers around 52 per cent of merchandise exports, is a reimbursement of basic and special customs duty paid by an exporter on an imported input used in the export product. |
| The benefit is given by way of a grant of duty credit against the export product at specified rates. |
| According to data compiled by the revenue department, the government had to forego as much as Rs 11,500 crore in 2003-04 on account of the DEPB benefit. |
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