Pvt agencies to give inputs to replace DEPB scheme

The government has shortlisted five agencies, including PricewaterhouseCoopers, to provide inputs for finalising an alternative to the popular duty neutralisation scheme "" the Duty Entitlement Passbook Scheme (DEPB).

The other shortlisted agencies are the Rajiv Gandhi Foundation, the National Council for Applied Economic Research, the Strategic Law Group and the Academy of Business Studies.

Senior government officials said that the new scheme, to be finalised over the next one month, would be modelled on the duty drawback scheme.

"The idea is to provide the exporters benefits of the drawback in lieu of DEPB plus some other incentives which would reimburse the other levies like state levies," an official said.

The DEPB is a reimbursement of basic and special Customs duty paid by an exporter on an imported input used in the export product. The benefit is given by way of a grant of duty credit against the export product at specified rates.

Exporters are given a DEPB scrip which is saleable and transferable.

The DEPB scheme is extremely popular among exporters covering nearly 52 per cent of the exports. The duty drawback, which reimburses the Customs duty component, covers between 15-20 per cent of the exports.

The Commerce and Industry Ministry is, however, withdrawing the scheme since it is not compatible with the norms of the World Trade Organisation.

The main difference between the DEPB and the duty drawback is that the DEPB is disbursed in the form of a DEPB scrip, while the drawback is taken as cash. Further the DEPB is administered by the commerce and industry ministry while the drawback is administered by the department of revenue under the finance ministry.

Officials said that a decision on who would administer the new scheme would depend on whether the it would be disbursed in cash or through a scrip.

According to data compiled by the revenue department, the government had to forego as much as Rs 11,500 crore in 2003-04 on account of DEPB benefit while the outgo on account of drawback was Rs 3000 crore.