May 18: The government has decided to end a tax incentive scheme for exporters on June 30, the revenue secretary said on Wednesday, as the export industry in the Indian economy was doing well and needed no incentives. Speaking to reporters, Mr Sunil Mitra said the government faced an estimated annual loss of $1.77 billion from the Duty Entitlement Pass Book scheme (DEPB), which began in 1997.
“We really feel that we are rewarding exports on one hand and losing revenue on the other hand,” Mr Mitra said. “It will be phased out on June 30. That is the finance ministry's decision,” he said. The DEPB scheme is a tax incentive scheme for exporters under which the government reimburses about $1.8 billion a year to exporters on taxes paid on imported supplies.
“It will still give some relief to exporters if taxes are reimbursed under the drawback scheme,” Mr Ramu Deora, president of the Federation of Indian Export Organisations (FIEO), said. The duty drawback scheme is an export incentive scheme also offered by the Indian government that neutralises levies paid on inputs with rates fixed annually, based on the duty structure in the budget. Last week, the trade secretary, Mr Rahul Khullar, said India’s April exports surged by more than a third on demand for engineering goods, gems and oil products.