Pointing out that delay in announcement of drawback rates has an adverse effect on exports, exporters have sought a mechanism through which changes in international price of inputs could be factored in while fixing drawback rates during a particular fiscal.

According to a release circulated by the Federation of Indian Export Organisations (Fieo), the recent increase in the drawback rates was being expected by the industry for quite some time.

Fieo president OP Garg said that such increase may not provide stability as after three months a new exercise will begin after the announcement of Budget 2006.

Fieo suggested that the department of revenue should factor the changes in international price of inputs and provide a mechanism for its adjustment during the year also.

Drawback payments are made to exporters in lieu of the input taxes paid by them for manufacturing products for exports.

Despite the delay, Mr Garg said that the hike in drawback would increase competitiveness of engineering, textiles and sports goods industry.