Government expands duty drawback scheme for exporters as DEPB scheme nears end

The finance ministry has expanded the duty drawback scheme to include 1,100 new export items currently covered by the duty entitlement passbook scheme (DEPB), which expires on 30 September.

With this, the total number of items in the drawback schedule will rise to around 4,000, against the present 2,835 items, finance secretary R S Gujaral said in New Delhi today.

As a transitory arrangement, these items will suffer a modest reduction in the existing DEPB rates, to the extent of 1 per cent to 3 per cent, which represents the ad-hoc rates of DEPB introduced in 2007. Further, the appropriate duty drawback rates for the items under DEPB have been recomputed taking into account the prevailing customs duty rates, he said

The minimum rate of drawback under the scheme will be 1 per cent while the maximum duty drawback for some items such as manmade textiles could be over 10 per cent. The government will notify the final rates of duty drawback by 23 September.

However, he said, the reduction has been capped at 10 per cent of existing duty drawback rates, wherever the reduction in percentage terms actually works out to be much more, so as to minimise the hardship faced by exporters, Gujaral said.

Most of the items, which are already covered under the duty drawback schedule, will suffer minor reduction in the existing drawback rates.