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New Delhi, April 8: The government has imposed a 5% customs duty on import of capital goods by the small scale sector against an export obligation of 6 times the duty saved under the Export Promotion Capital Goods (EPCG) Scheme.
As per the stipulation the exporting unit will have to make these exports over a period of eight years. This means that if the customs duty on import of capital goods is say 10% then the sector has got a 5% concession. The unit will then have to make exports six times the value of this 5% duty saved.
Currently the export obligation under the EPCG scheme is eight times the duty saved. The government has reduced this obligation to six times in order to provide an impetus to industries to modernise plant and machinery. This will enhance their export competitiveness in the medium term.
"The scheme is a welcome step but is hardly an incentive given the entire gamut of issues that affect the small scale sector," Secretary general, Federation of Indian Micro and Small and Medium Enterprises (Fisme), told FE. There are too many hassles under the EPCG scheme as exporters have to calculate the percentage they have to return on their own, he added. A lot more needs to be done to promote exports from SSIs as post-WTO the income tax benefit to these units has also gone.
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