Duty forgone likely to be less than Rs 800 cr

Duty drawback and DEPB rates may be increased by 1 per cent.

The additional revenue forgone on account of the new initiatives in the annual supplement to the Foreign Trade Policy is expected to be less than Rs 800 crore this fiscal.

Commerce ministry officials said all the initiatives in the supplement, including new schemes like the Focus Product and Focus Market schemes, rebate of service tax and fringe benefit tax, as also the decision to treat sales of ATF to outbound air traffic as exports had the backing of the revenue department and would be notified soon.

"The revenue outgo on account of the Focus Product and Market schemes is only around Rs 250 crore. While the outgo on account of the Focus Product Scheme would be between Rs 10-12 crore, the outgo on account of the Product market scheme would be around Rs 240 crore," an official said, adding that this was far below the Rs 4,000 crore outgo under the Target Plus Scheme.

Similarly, the intention to include service tax and fringe benefit tax under the export promotion schemes will lead to an additional burden of around Rs 500 crore this fiscal.

Officials said the two taxes were likely to be included in the new duty drawback and Duty Entitlement Passbook Scheme rates to be notified later this year.

"The duty drawback and DEPB rates are likely to be increased by 1 per cent on account of the inclusion of the two new taxes. However, since both the rates are likely to be revised downwards due to the cut in Customs duty, the overall impact of including the two duties is likely to be negligible," an official said.

The outgo under drawback was Rs 4,000 crore and under DEPB Rs 5,500 crore during 2004-05.

The Vishesh Krishi Upaj Yojana will be replaced by Vishesh Krishi Upaj and Gram Yojana, under which gram udyog products will also be entitled for a duty credit of 5 per cent of the free-on-board value of exports made after April 2006. With exports of khadi and village industries pegged at around Rs 1,500 crore, the annual outgo due to the scheme would be around Rs 75 crore.

In addition, a new Duty Free Import Authorisation Scheme has been introduced with effect from May 1, 2006, with combined features of the advance licence scheme and the Duty Free Replenishment Certificate (DFRC). DGFT officials said the scheme was revenue neutral.

The DFRC would be discontinued with effect from April 30, 2006 while the advance licence scheme has been re-named as Advance Authorisation Scheme.