Government To Relook Replacing DEPB with Duty Drawback.

BS reported that the Indian government is taking a relook at its automobile industry specific plan to replace the Duty Entitlement Pass Book scheme with the duty drawback scheme originally set to roll out next month end.

The Society of Indian Automobile Manufacturers has undertaken a study to determine reimbursement rates for the automobile industry under the duty drawback scheme which is set to replace the 14 year old DEPB incentive that the government has been giving exporters. A detailed report is expected to be placed before the Commerce ministry next month, after which a final decision would be taken.

Mr Sugato Sen senior director of SIAM said the basic as well as customs duties currently amounted to 7% to 9% of total costs for two wheeler and commercial vehicle manufacturers. He said that “The DEPB scheme reimburses this component ensuring global competiveness of Indian manufacturers who export their products. We are negotiating with the government for the extension of the DEPB scheme until a comprehensive package is determined to replace it.”

According to industry sources, two wheeler manufacturers such as Bajaj Auto and TVS Motor Company, which account for over 65% of the 2.3 million vehicles annually exported from India, are exploring options to import components to sustain export operations profitably.

An industry official said that “Under the duty drawback scheme, manufacturers would only be reimbursed the customs duty component. Leading two wheeler makers are now mulling options to import components to avail the cost benefits. This will adversely affect the domestic auto component industry.”

An Ernst & Young report on the Indian auto component industry states that exports from the segment are likely to go up to USD 29 billion by 2020 up from USD 13 billion of auto components exported in 2009-10. To achieve this target required continued policy support from the government.

Source : steelguru.com