A government committee on devising an alternative to the Duty Entitlement Pass Book (DEPB), an export incentive scheme ending on September 30, today held consultations with exporters who pressed for continuation of the sop to boost the country's external trade.
The exporters made their presentation before the high-level Drawback Committee Chaired by Saumitra Chaudhary, Member of the Prime Minister Economic Advisory Council.
"We stated before the committee that the DEPB Scheme should be continued till the Goods and Services (GST) tax is introduced. Alternatively it should be replaced with a scheme to compensate exporters who pay not only local taxes but high interest rates," President of the Federation of Indian Export Organisations (FIEO) Ramu Deora said.
Exporters were receiving incentives equivalent to 8-9% of their merchandise shipments under the 14-year-old DEPB scheme. Since, the scheme has not been WTO compliant, the government is working on an alternative for the same.
However, exporters are peeved over the withdrawal of the scheme, apprehending that they will not be compensated under the new arrangement - Duty Drawback - to the same extent as DEPB.
The government spends about Rs 8,500 crore annually on DEPB and the amount is likely to be reduced by half.
Deora said that export growth, which has been growing by over 40% in the last few months, would come crashing down once exporters stop getting the DEPB incentives after September 30.
"The global market is bad...There is uncertainty in the US and there are payment problem in Europe. The impact will be seen from the third quarter of the current fiscal," he said.
During the April-June this fiscal, exports grew by 45.7% to $79 billion.