Export incentive plans placed under scanner

Committee set up to look into all existing schemes.

The government is looking to plug revenue leakages arising out of export promotion schemes.

An inter-ministerial committee headed by Foreign Trade Director -General KT Chacko and A P Sudhir, member, Central Board of Excise and Customs, has been set up to review all the existing reward schemes for exporters, including Target Plus, Served from India and the Vishesh Krishi Upaj Yojana.

Government officials told Business Standard that the committee had been asked to submit its recommendations in the next two months. If approved, the recommendations of the committee will be implemented from the next fiscal.

"The committee has been asked to see if the various reward schemes are WTO compatible. The exercise will also review whether there is a need to have so many reward schemes and if they can be discontinued or dovetailed into other schemes," an official said. Officials admit that the exercise has also been initiated as some of the schemes like Target Plus can easily be misused leading to revenue loss for the government.

"Exporters will continue to export more irrespective of whether there is a reward or not," an official said, adding that the money saved by discontinuing or merging some of the schemes could then be used to finance new schemes to replace the Duty Entitlement Passbook Scheme (DEPB).

The total duty foregone under various export promotion schemes was Rs 41,029.43 crore duting 2004-05 while the duty foregone as a percentage of the customs duty collections was 72.9 per cent during 2004-05. In the past, several export promotion schemes like the Vishesh Krishi Upaj Yojana and the Target Plus scheme could not be implemented after they were announced in the five-year Exim policy in August last year on account of concerns raised regarding their implementation by ministries like agriculture and finance.

Plugging leakages

An inter-ministerial panel set up to review reward programmaes

Panel to submit its report in two months

If approved, panel's recommendations to be implemented from next fiscal

Panel to see if schemes are WTO compatible