Industry disappointed with reduced duty drawback rates

- Advertisement -

By Srabani Sen

The withdrawal of the country’s most popular and effective scheme for export promotion—Duty Entitlement Pass Book (DEPB)—was inevitable as it contravened certain stipulations of the WTO. The new Duty Drawback Scheme (DDS), which came into effect from October 1, 2011, is compatible with WTO rules. The new scheme provides for the reimbursement of local taxes on inputs used in goods manufactured for export. It is being expanded to partially compensate for the loss to exporters due to withdrawal of the DEPB scheme. The new rates for duty drawback or tax refunds on 4000 export items for the current fiscal are slightly lower than what was provided in 2010-11.

Duty drawback is the refund of customs duties and fees paid on imported merchandise that is either re-exported or destroyed under customs supervision.

- Advertisement -

Manufacturers disappointed

The electronics industry expressed its disappointment over the abolition of DEPB. “It has been reported by a number of manufacturers and exporters that there are a number of anomalies in the revised DDS causing problems in its implementation. This is particularly due to contradictions in the classification of the products and electronic components. ELCINA is interacting with the industry and the government to rectify these problems,” explains Rajoo Goel, secretary general, ELCINA.

Currently, companies get the DEPB benefit on an average rate of 9 per cent. On the other hand, the average duty drawback rate when the Cenvat facility is used is 13-14 per cent. Despite this, DEPB is considered more attractive as the exporters get the duty free scrip or entitlements based on the value of goods exported, to pay for import duties. Although the assumption is that all the inputs have been imported, exporters are allowed to use up to 50 per cent domestic inputs.

“Extending DEPB indefinitely was not possible due to WTO restrictions. However, we hope that the government will take care of the anomalies raised by the industry,” says T Vasu, director, Tandon Group and president, ELCINA.

New duty drawback rates

Most of the items that are already covered under the duty drawback schedule suffer a minor reduction in the existing drawback rates. The benefit to the exporters is, however, lower by 1-3 per cent in comparison to the DEPB scheme.

Exporters now get a drawback on 4000 items, including those that are presently covered under the DEPB scheme. Since tax incentives for these goods will now be available under DDS, the total number of items under DDS would increase to about 4000 from the present 2835.

The popular DEPB

Under the DEPB scheme, the government’s annual expenditure in reimbursing exporters was about
Rs 85 billion (Rs 8500 crore). The DEPB scheme had helped exporters by partly offsetting the import duty on raw materials for export items, and even those using domestic inputs were allowed to avail this benefit.

“Although some rationalisation has been done while deciding on the new duty drawback rates, it is still going to be a loss for hardware manufacturers. The government should give a special DDS reduction rate to all hardware products,” concludes Sujata Soparkar, director, Integrated Electronics Technology P Ltd.

- Advertisement -

Related Artcles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Buzz

German Electronics Manufacturer Hama Enters India

0
The company has tied up with various distributors and retailers; initially plans to launch over 300 products in India Germany-based Hama, a leading global manufacturer...

Irani Srivastava Roy: Signify’s New Chief HR Officer for India

0
The lighting company appointed the 23-years-of-experience holder for aligning the organization's people strategy with business objectives I look forward to further strengthening the...

MoS Inaugurates Digital India Startup Hub at STPI-Davanagere

0
The start-up hub was inaugurated at the 'Software Technology Park of India', which is the 63rd STPI centre in India and the fifth in...

Exclusive

German Electronics Manufacturer Hama Enters India

0
The company has tied up with various distributors and retailers; initially plans to launch over 300 products in India Germany-based Hama, a leading global manufacturer...

Irani Srivastava Roy: Signify’s New Chief HR Officer for India

0
The lighting company appointed the 23-years-of-experience holder for aligning the organization's people strategy with business objectives I look forward to further strengthening the...

Fujitsu Joins SettleMint to Utilize Blockchain Tech

0
The global strategic agreement aims to accelerate enterprise blockchain technology and promote its use cases Japanese ICT company Fujitsu and blockchain platform SettleMint recently announced...

Important Sectors

German Electronics Manufacturer Hama Enters India

0
The company has tied up with various distributors and retailers; initially plans to launch over 300 products in India Germany-based Hama, a leading global manufacturer...

Irani Srivastava Roy: Signify’s New Chief HR Officer for India

0
The lighting company appointed the 23-years-of-experience holder for aligning the organization's people strategy with business objectives I look forward to further strengthening the...

EVs Set to Drive Telematics Demand: Report

0
Telematics shipments in India to reach 50 mn units in 2030 The report expects that the rising Electric Vehicle (EV) demand, enhanced 4G...

Printed Electronics for Smart Building Solutions

0
The two companies will collaborate to scale novel water detection tape solutions based on printed electronics Sensor-maker LAIIER and Germany-based chemical and consumer goods company...

India Assumes Chair of Global Partnership on AI

0
MoS Rajeev Chandrasekhar represented India at the Global Partnership on Artificial Intelligence (GPAI) Summit He believes National Data Governance Framework Policy with Indian...

Manufacturing

First Private Company in India Builds its Own Mission Control Centre

0
Agnikul Cosmos is set to operate from this new facility at Sriharikota which was inaugurated by Shri S. Somanath,  Chairman, ISRO. India’s first launchpad and...

New Product Distribution Center by TI in Germany

0
The centre in Frankfurt enables same-day delivery to central Germany next-day delivery capabilities to most European-based customers.  Texas Instruments, a global semiconductor company whose presence...

Redwood to Supply High-Nickel Cathode to Panasonic

0
Despite the increasing demand, there is no cathode production at scale in North America today: Battery material maker Redwood As per the latest reports, Panasonic...
Infineon, CoolSiC

Infineon Planning New Factory in Dresden

0
The semiconductor major has enhanced its long-term financial targets after witnessing a remarkable FY22 Germany-based Infineon Technologies recently released its results for the fourth quarter...

Uno Minda To Invest Rs 400 Cr In New Light Plant

0
The plant is intended to be commissioned by Q4 FY24 The group registered its highest-ever quarterly performance recently As per the latest reports, the...