Export schemes cost govt Rs 39,704 cr

DEPB scheme alone cost Rs 11,535 crore in 2003-04.

The government lost Rs 39,704 crore in 2003-04 on account of the various export promotion schemes. This means that for every Rs 7.35 earned from exports, the government had to forgo Re 1. India's exports during 2003-04 were around Rs 2,91,582 crore.

Data compiled by the revenue department show that revenue loss was highest on account of the duty entitlement passbook (DEPB) scheme at Rs 11,535 crore. This was followed by the advance licence scheme that cost the government Rs 10,134 crore in the previous fiscal.

The duty drawback scheme, which is being considered as an alternative to the DEPB scheme, cost the government Rs 3,057 crore. The export promotion capital goods scheme cost the government Rs 3,399 crore, while benefits to special economic zones cost over Rs 1,300 crore. Similarly, benefits to export-oriented units and software technology parks cost over Rs 9,400 crore.

However, commerce ministry officials say the revenue loss is mostly notional since imports under most of the schemes take place against actual exports.

Under the advance licence scheme and the duty-free replenishment certificate (DFRC), goods cannot be imported if there are no export orders and hence the revenue lost is only notional. Similarly, in the case of the EPCG scheme, the duty forgone is marginal.

Referring to the DEPB scheme, which is proposed to be continued until a new scheme is formulated to replace it, officials said since the notional duty lost under DEPB depended directly on the basic Customs duty, the loss under DEPB would come down this year because of a fall in import duty on certain items.

While commerce ministry officials claim that the revenue loss is notional, trade experts say the government has no clear road map to phase out subsidies.

They are, however, encouraged by the indications given by the government that it will restructure some non-WTO compatible export promotion schemes such as the DEPB.