An idea whose time has come

In the last week of April, employees of the Directorate General of Foreign Trade (DGFT) and its regional offices observed two days as 'black days' and a one-day 'pen down strike'. They put up notices that they were protesting against the government's decision to transfer the work of DGFT to the Customs department.

The first suggestions to administer export promotion schemes through the excise and customs departments were made almost two decades earlier, when the government notified the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. These required the excise department to verify the genuineness of a party's request, get a bond to secure the duty amount and issue a procurement certificate. The role of Customs was limited to releasing the goods at concessional import duty against the procurement certificate. The task of monitoring the end-use of goods and discharge of bond was left to the excise department.

Recently, the 1996 Rules were replaced by the 2016 Rules, considerably simplifying the procedures. These Rules are being used since 1997 for allowing duty-free import of goods supplied free of charge by a foreign buyer for jobbing. The suggestions were to also allow imports against licences/authorisations issued under the duty exemption and Export Promotion Capital Goods schemes under the same Rules. The merit was that exporters had to deal with only the jurisdictional excise authorities instead of dealing with DGFT, Customs and excise. Anyway, the jurisdictional excise authorities could not be avoided because they had control over the factory and were involved in granting relief from excise duty for export goods.

When the Duty Entitlement Passbook (DEPB) scheme was introduced, there were suggestions that as it only involved credit, debit and transfer, as in any bank account, the Customs authorities could administer the scheme online or give that benefit by way of duty drawback. With the advent of enabling technology, more duty credit schemes and the compelling need to reduce costs, the need to let Customs handle the schemes became all too apparent.

My article titled 'Abolish the DGFT offices' published on August 20, 2007 in this newspaper advocated administration of export promotion schemes through excise and Customs alone. Sukumar Mukhopadhyaya, former member (customs) of the Central Board of Excise and Customs (CBEC) had expressed similar views in an article dated February 11, 2008, titled 'A suggestion to promote export'. Exporters, however, did not push strongly for such changes.

For obvious reasons, DGFT did not want to let go of its power to administer the export promotion schemes. That position seems to be changing. The commerce ministry has already put out a 'Request For Proposal' for consultants who can study and give recommendations for restructuring DGFT and that could include administering the export promotion schemes through the revenue gepartment. The employees of DGFT are protesting for well-known reasons.

It is now for exporters to support any move to get rid of the unnecessary bureaucracy that imposes heavy costs and unnecessary procedures and paperwork that divert attention from the essential task of boosting exports. On its part, the government should stand firm and not give in to the self-serving demands of its employees.

email: tncrajagopalan@gmail.com