Sops to cost North Block Rs 33,000 cr

The finance ministry is set to forgo revenues of around Rs 33,000 crore in 2003-04 on account of incentives given to exporters under various export promotion schemes.
This marks a 32% jump over the revenue foregone in 2002-03, which stood at Rs 25,000 crore in 2001-02.
With a reduction in Customs and excise duty rates in the 2003-04 Budget, the finance ministry does not expect a significant jump in the notional revenue loss during the ensuing fiscal even after handing out a host of concessions in the Exim policy.
Exports grew by 16.76% in dollar terms during April to December 2002-03 as opposed to 0.7% in 2001-02.
Various incentives given in the Exim policy seem to have yielded results, with exports from EOU, special economic zones and erstwhile EPZ growing by over 20% during this period.
The break-up of the revenue forgone under various schemes shows a spurt in the outgo on account of DEPB from Rs 5,600 crore in 2001-02 to Rs 7,000 crore in 2002-03.
The revenue forgone on advance license scheme is expected to increase to Rs 9,000 crore in 2002-03 from Rs 7,800 crore in 2001-02.
“The notional revenue loss in the coming fiscal would depend on whether the schemes for which concessions have been given would take off�, Central Board of Excise and Customs chairman M K Zutshi told ET.
A host of fresh sops have been announced for Special Economic Zones (SEZ), though most notified greenfield projects have not yet got off the ground.
Sales from the Domestic Tariff Area to SEZs will henceforth be treated as exports.
This would entitle domestic suppliers to drawback, DEPB benefits, central sales tax exemption and service tax exemption. Domestic sales by SEZ units will also be exempt from the 4% Special Additional Duty on Customs (SAD).
The finance ministry has also allowed duty free import facility for service sector having a minimum forex earnings of 10%.
The duty free entitlement will be 10% of the average forex earned in the preceding three licensing years.
The entitlement has been restricted to 5% for hotels. The concessions have been given, keeping in view the export potential of this sector which contributes to roughly 48.5% of the GDP.
According to the CBEC chairman, the annual advance license facility for status holders to enable them plan for their imports of raw material and components on an annual basis would have no impact on revenues as there is no enhancement or liberalisation of incentives in this case.