DEPB Scheme To Go On Till April 1, 05

New Delhi, January 23: | Updated: Jan 24 2003, 05:30am hrs
Accepting Prabhu panel report, the commerce ministry plans to continue the existing duty entitlement passbook (DEPB) scheme by making it WTO-compliant and merge it with the duty drawback scheme from April 1, 2005. To facilitate this, suitable norms/procedures for the operation of both the schemes will be put in place. The Kelkar committee recommendation that the DEPB scheme be phased out immediately has not therefore been accepted, says director-general of foreign trade Lalit Mansingh.

Lalit Mansingh
Mr Mansingh told FE that the reason why the DEPB scheme was being continued for the next two years (2003-04 and 2004-05) was that the value-added tax (VAT) system, slated to be introduced from April 1, 2003, would get stabilised by April 1, 2005.

The high-level committee headed by Mr PP Prabhu, former commerce secretary, was set up in 2001 to make recommendations for framing a new five-year Exim policy which was to be co-terminus with the 10th Five Year Plan from April 1, 2002.

One of the recommendations related to the continuation of the DEPB scheme till March 31, 2005 and its merger with the duty drawback scheme thereafter. The recommendation had been accepted by the ministry after a great deal of deliberations, he pointed out. The first year of the new Exim policy from April 1, 2002, will be completed by March 31 this year.

The proposal is expected to bring cheer to the exporting community, which is agitated for some time about the Kelkar committee recommendation that the DEPB scheme be withdrawn immediately.

Mr Mansingh added that the commerce ministry would take into account the incidence of special additional duty (SAD) on DEPB and revise DEPB rates accordingly. This would go a long way in meeting additional cost borne by exporters arising from SAD.

DGFT noted that the import duty on capital goods prevailing in most developed countries was in the range of 8 to 5 per cent. Again, while these goods attracted a duty at 5 per cent in China and 2 per cent in UAE, there was zero duty in Thailand.

On the other hand, the duty charged in India was as high as 16 per cent. If the countervailing duty and the SAD element were also taken into account, the total incidence would work out to about 32 per cent, which was prohibitive, he said. The high rate was the main reason behind the European Unions moves for initiating frequent anti-dumping actions against Indian textile products, he added.