New Delhi, March 3 Mirroring the decline in exports and rupee appreciation, the revenue foregone in 2009-10 by the Centre due to export promotion schemes is estimated to have fallen marginally by 11 per cent from the previous year, but was still high at Rs 43,622 crore.
In 2008-09, it was Rs 49,053 crore.
Exports for April 2009-January 2010 were Rs 6,29,224 crore as against Rs 7,15,764 crore, a fall of 12.1 per cent in rupee terms over the same period last year.
The rupee has appreciated by an average of around 7 per cent in 2009-10 over the previous year, leading to a reduction in value of imports in rupee terms. Since the duty imposed is also on rupee terms, consequently the revenue foregone has also shown a decrease.
Top of the charts
The maximum increase in revenue loss in 2009-10 was seen in Vishesh Krishi and Gram Udyog Yojana (or VKGUY, an 88.7 per cent growth to Rs 3,886 crore in 2009-10), followed by Focus Market/Product Scheme (or FM/PS, an 88.5 per cent growth to Rs 769 crore in 2009-10). This was because items/markets under FM/PS as well as products under VKGUY were increased.
The Special Economic Zone scheme came next with a 38 per cent jump to Rs 3,204 crore in 2009-10, indicating an increase in unit operations.
The revenue loss due to the popular Duty Entitlement Passbook Scheme (DEPB) recorded a 24.2 per cent increase to Rs 8,806 crore in 2009-10 owing to the additional benefit of 1-3 per cent provided to this scheme as part of stimulus packages.
The Duty Free Import Authorisation (DFIA) scheme also recorded an increase of 29.8 per cent to Rs 1,646 crore in 2009-10 as it replaced the Duty-Free Replenishment Certificate (DFRC). The revenue loss due to DFRC and Target Plus Schemes fell as they were discontinued.
The maximum chunk of the revenue foregone continued to be due to Advance Licence Scheme (ALS), though it shrunk by 13.8 per cent in 2009-10 to Rs 10,682 crore. The fall was because of reduction in Additional Customs Duty by around 4 per cent as a consequence of reduction in excise duty.
Fall in losses
Popular schemes such as export-oriented units, electronic hardware and software technology parks (EOU/EHTP/STP) schemes also recorded an aggregate fall in revenue losses of 40.2 per cent to Rs 8,015 crore in 2009-10. Many units under EOU/STP/EHTP have de-bonded due to the uncertainty surrounding extension of tax holiday beyond March 2011.
Revenue foregone from schemes such as the Export Promotion Capital Goods (EPCG), the Duty Free Entitlement Credit Certificate (DFECC), and the Served from India Scheme (SFIS) has also fallen.
Schemes including FM/PS, VKGUY, SFIS, TPS and DFECC are incentive schemes for which the Commerce Ministry provides funds separately.
But ALS, EOU/EHTP/STP, EPCG, DEPB, SEZ, DFRC and DFIA are either exemption or input tax neutralisation schemes that give the country's exporters an input tax credit that in turn helps them with a level playing field in the international markets. So if one calculates the revenue foregone only from these exemption/input tax neutralisation schemes, it would be just Rs 37,970 crore, a fall of 14.5 per cent from Rs 44,417 crore in 2008-09.
Source : Business Line