Export promotion schemes to be reviewed

Export promotion schemes are in for an overhaul, with the government reviewing them in the run-up to the Budget.

Finance ministry officials told Business Standard inter-ministerial committees were looking at the schemes to identify the ones that could merged or wound up. The move is aimed at ensuring that exporters have little scope to claim multiple benefits.

While plugging the scope for misuse, the ministry also intends to simplify the administration of the schemes and settle a large number of claims and issue clearances on the basis of self-assessment.

Export promotion schemes, a majority of which are for neutralisation of duties, result in an annual outgo of nearly Rs 40,000 crore.

"At present, exporters have access to the duty entitlement passbook scheme, the duty drawback scheme, cenvat credit entitlement and the schemes for special economic zones. We are trying to identify the schemes that can be reworked or merged," an official said.

According to officials, the government does not want exporters to be burdenned by duties and that any duty paid on exports should be reimbursed.

They added that efforts were already on to find an alternative to the duty entitlement passbook scheme (DEPB), a popular duty neutralisation scheme covering 52 per cent of the country's exports. The scheme will be discontinued from April 1. The details of the new scheme are expected in the Exim Policy.

The advisory group on tax policy for the Tenth Plan, headed by present adviser to the Finance Minister Parthasarthi Shome, had also suggested the rationalisation of export promotion schemes by removing the overlaps.

Even the taskforce on indirect taxes under Vijay Kelkar had recommended that the export strategy should focus on only three schemes "" the SEZ scheme, the advance licensing scheme and the drawback scheme.

The commerce ministry is also looking at measures to reduce transaction costs for exporters. A committee headed by Director General of Foreign Trade KT Chacko has been set up to look into the issue.

In addition, committees, headed by middle-level officers have also been constituted for product-specific sectors such as diamond, leather, handicrafts, agriculture and handloom.