DEPB Scheme May Get Another Lease Of Life.

Duty Entitlement Pass Book (DEPB), the popular duty neutralization scheme for exporters, is expected to get another extension, this time for nine months. Though the revenue department is opposed to another lifeline for the 14-yearold scheme whose extended term is due to end in June, the government, officials admitted , have little choice as it had failed to roll out the much awaited goods & services tax (GST) regime.

Apart from citing large leakages, the revenue department has repeatedly cited the scheme's incompatibility with the World Trade Organization guidelines to argue for its discontinuation. The powerful exporters' lobby has, however, repeatedly got the commerce ministry to seek an extension, and the revenue department has only played ball.

Though in the past, the commerce ministry had said that it was working on a revised scheme, it has failed to put in place the new mechanism. This time too, exporters have started lobbying. On Tuesday, the Federation of Indian Export Organizations said the policies adopted by the government would result in overall exports falling below the $200 billion mark compared to nearly $250 billion in 2010-11.

Auto stocks too have taken a beating as there is no clarity on the continuation of the scheme. Government officials, however, said that though there was no formal decision on extending the scheme beyond June 30, the finance ministry had little choice but give it a fresh lease of life for nine months. "Once GST is rolled out nationally, then we can think of winding it up," an official said. The government is trying to implement GST, billed as the biggest tax reform, from next April though there are several areas where political agreement is elusive.

DEPB is the fifth most popular tax neutralization scheme with total benefits estimated at over Rs 8,500 crore in 2010-11.

According to finance ministry's estimates , only the advance licence scheme (Rs 15,700 crore), export promotion capital goods (Rs 10,000 crore), export oriented units/ software technology parks (Rs 9,700 crore) and special economic zones (Rs 8,600 crore) had cost the government more in terms of revenue foregone. In all, the Centre had foregone revenue of Rs 58,000 crore in 2010-11 to boost exports, the finance ministry estimated.

Source : timesofindia.indiatimes.com