The government has come out with some timely export promotion measures to utilize the opportunities of a depreciated rupee. As a fresh measure, the Duty Drawback scheme is better incentivized to allow exporters to refund or claim the different taxes they have paid-excise, customs and services, in the production of the exportable commodity.
As per the change, the rate for duty credit has increased and more items are included under the scheme to promote export production. According to the Ministry of Finance, the new will come into effect from September 21.
The restructuring of the scheme by including more commodities and increasing the tax credit rate will reduce the prices of exportable commodities from the country. Already, the July trade data shows some strong recovery on the export front. Simultaneously, the depreciated rupee offers some export competence. Hence, it is expected that the new measure will further boost exports.
For the restructuring of the Duty Drawback Scheme in the present format, the government has followed the recommendations of the committee headed by Saumitra Chaudhuri, Member, and Planning Commission.
The Duty Drawback scheme is the major export incentive scheme after the withdrawal of the DEPB (Duty Entitlement Pass Book) Scheme in 2012 October. A major demerit of the DEPB was that it had high subsidy component and thus was WTO incompatible.
Under Duty Drawback scheme, the manufacturers of exportable commodities can obtain inputs without payment of customs duty (if the input is imported)/excise duty (if the input is domestically produced)/service tax or obtain refund of duty paid on inputs. “Drawback” is in relation to any goods manufactured in India and exported, means the rebate of duty or tax, as the case may be, chargeable on any imported materials or excisable materials used or taxable services used as input services in the manufacture of such goods.
The advantage of the scheme is that the exporters can reduce the price of exportable commodities as domestic taxes are excluded from the price of the commodity.