Exporters hurry to avoid DEPB value cap

the atmosphere for the five-year exim policy is warming up, the dgft nl lakhanpal is burning midnight oil to make sure that the five-volume exim policy is presented to the press on march 31 at 11 in the morning. this is perhaps for the first time in the history of dgft that the policy documents are being presented on a sunday. the holi festival and the need to present the policy before the end of the financial year have forced sunday as the chosen date for union commerce minister murasoli maran to present the first five-year exim policy of the century. the minister is fully involved in the exercise. he has personally attended the series of regional meetings organised by fieo to discuss the contours of the policy. all suggestions are being fed into the computer and each point is said to be given full consideration before finalising the document. the full policy set of five volumes are being issued. the main exim policy, handbook of procedures, itemwise policy along the 8/10 digit indian trade classification, input-output norms for advance licences and booklet covering the new depb rates are the ingredients in the broth brewing in the chambers of udyog bhavan. the full set is priced at a stiff rs 2,800, while private publishers are offering the package for just rs 2,000. a commentary with the essential texts priced at rs 430 is also under publication. cynics say the ritual of the five-year policy is a misnomer. an average of over 200 amendments per year with a major revision at end march make sure of discontinuities. further, the revenue department is constantly blowing holes in the policy features, making them unworkable or non-workable. besides, the exim policy has little left since the import part is almost over with qrs gone for all but 500 or so items. on the export part, the government has hardly any money to dole out fresh incentives. in fact, the exporters will be lucky if they are able to save the depb schemes from the determined onslaught of the department of revenue, worried over falling collections. nonetheless, the fact remains that the ritual of five-year policy has its relevance as it cleans up the mess in the export promotion and takes a fresh look on the subject of resetting the goals. our information is that former commerce secretary p p prabhu has submitted a 150-page report to mr maran which forms the basis of the five-year policy. besides, dgft lakhanpal has been in the seat for well over four years and putting all his experience to bear on the document. the results should be visible in the policy. exporters are, of course, apprehensive of the governmentâ€™s moves. they are speeding shipments to protect themselves from the possible re-installation of value caps in depb rates. it may be recalled that the department of revenue had agreed to the removal of value caps for items with medium or low rates of depb to arrest the fall in export at the end of last year. now that the dgcis figures show signs of revival, the department wants restoration of status quo ante. the dgft may well oblige. unfortunately, the dgft does not have a system of protection of contracts for lcs already opened by the buyer. thus the exporterâ€™s thin margin may disappear suddenly even when he is earning higher than normal foreign exchange for the country. there is yet another cause of uncertainty. there is a fear that the full set of five documents will not be available on march 31. the supplies will come in dribbles spread over the next fortnight. this can cause disruption in export import operations as both traders as well as administrators will not be sure what the current rule is and decisions will be postponed till the documents are available. dgft may have to make sure that the government press does the needful to keep the flow moving. sales into dta: the department of revenue has clarified to this author that the correction in the sales to dta was a procedural one, there is no change in the duty on sales into the dta from eou and the like. the duty rate continues at 50 per cent of the normal rate in cases where imported inputs are used and 30 per cent where domestic inputs are used. the only thing that has changed is the formula of calculation which is based on aggregate duty and not separate duty rate. in fact, the formula was already there in a cbec circular but now it has been made a part of the notification itself. an article in et by this author suggested that the duty rate had come down to 30 per cent from 50 per cent. the corrigendum only corrected a mistake in the notification. there is no change in the duty rate in the pre-budget and post-budget dispensation. (academy of business studies)

Exporters hurry to avoid DEPB value cap

THE ATMOSPHERE for the five-year Exim Policy is warming up, the DGFT NL Lakhanpal is burning midnight oil to make sure that the five-volume Exim Policy is presented to the press on March 31 at 11 in the morning.

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