The commerce ministrys export incentive schemes will cost the national exchequer around Rs 13,025 crore in 1998-99, according to rough estimates by government officials.
An estimate of the revenue foregone in the year 1997-98 (up to February) on account of various export incentive schemes works out to Rs 11,841 crore, according to a finance ministry calculation.
As a percentage of the gross customs collections, it works out to around 32.65 per cent (with total customs revenue estimated at Rs 36,270 crore).
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The revenue cost of providing export incentives has gone up sharply from 28.45 per cent in 1996-97.
The additional revenue lost on account of changes made in 1998-99 is expected to be around Rs 1,200 crore. However, this will vary, depending on how the schemes perform and how many licenses are issued.
These figures are being contested by the commerce ministry, which is taking up the issue with the revenue department. Commerce ministry sources argue that the figure for 1998-99 will be far lower than the finance ministrys projections, since the 1997-98 figure was itself an overestimation.
Commerce ministry officials add that the revenue loss is, in any case, purely notional since total imports would have been lower if the export promotion schemes had not existed.
It is also argued that the finance ministrys 1997-98 estimate cannot be accurate since Rs 705 crore is the loss estimated on account of the value based advance licensing scheme, which is no longer in existence.
Further, commerce ministry sources point out that imports under the 10 per cent export promotion capital goods scheme between April 1997 and February 1998 amounted to Rs 348 crore. The revenue loss (at 10 per cent of cif value) will work out to Rs 35 crore or so. Under the zero duty scheme, imports worth Rs 2,723 crore were affected. Therefore, the revenue loss suffered (at the 20 per cent on capital goods) works out to about Rs 540 crore.
Therefore, the commerce ministry argues that the revenue loss on the EPCG scheme was Rs 575 crore till February 1998 (and could work out to around Rs 600 crore for fiscal 1997 when the figures for March become available) and not Rs 1,240.2 crore as estimated by the finance ministry.
In any case, commerce ministry sources argue that the total export obligations under the EPCG scheme work out to six times the licenses issued. The ministry also points out that a whopping 93 per cent of export obligations have been fulfilled during the first few years of the schemes operations.
Ministry sources claimed that the data of the commerce and finance ministries are at odds because the revenue department calculates the duty loss on the basis of the cif value of imports, when the imports enter the country, and the commerce ministry calculates it on the basis of the dates of issuance of the license. Therefore, the finance ministrys estimates include imports contracted for in the previous year, which actually enter the country the following year.