Exporters cheer as DEPB gets one-year extension

NEW DELHI: The Duty Entitlement Pass Book (DEPB) scheme ��� by far the most popular export-promotion tool ��� has secured a fresh lease of life. Even as discussions are on to replace the scheme, the government has decided to persist with it till March 31, ���07 since no alternate export window has been formulated till now.

A proposal to extend the scheme for a year was cleared by the Cabinet Committee on Economic Affairs (CCEA) on Thursday. The DEPB scheme was to expire on March 31, ���06 and commerce & industry minister Kamal Nath had sought a one-year extension.

The notional revenue foregone under the DEPB scheme was Rs 11,000 crore in ���03-04, but it came down to Rs 8,000 crore in ���04-05. Even now, the DEPB covers a little more than 30% of all exports from India.

Welcoming the extension, the Federation of Indian Export Organisations (FIEO) said the DEPB scheme should continue till a replacement is formulated.

This will help exporters in negotiating long-term contracts, officials of the Federation said. The government has been working on a replacement for the DEPB, but no viable alternative has been found yet.

While officials were looking for a scheme that would be compatible with all norms of the World Trade Organisation (WTO), suggestions to compensate exporters for state-level taxes was also considered.

However, the suggestions that have come up so far have not been accepted. Exporters feel that providing a one-year extension to the scheme makes good business sense. In fact, the scheme should continue for six months after a replacement is put in place.

This will help in negotiating long-term contracts and the two schemes should run concurrently for six months after the replacement is introduced, they said.

Earlier, the government was giving quarterly extensions to the DEPB, even though there was no sign of a replacement. A six-month extension was also tried once.

Exporters feel that instead of setting fresh deadlines, the government should wait till a replacement is work out and then act on scrapping the DEPB.

However, officials of the revenue department are not in favour of persisting with the DEPB. They are keen to merge it with the duty drawback scheme, which is administered by the revenue department.