Cutting duty drawback rate for engineering exports unfair: EEPC

The government has meted out an unfair treatment to engineering exports by cutting duty drawback rates for over 3,500 products, industry body EEPC India said today.

The new EEPC India Chairman Anupam Shah also said there is no way the country's current account defect (CAD) can be reduced without a substantial increase in engineering exports. The CAD for the first quarter of the fiscal widened to 4.9% of GDP.

"Giving unfair treatment to the engineering exports, the Finance Ministry has cut back the duty drawback rates for over 3,500 products ranging between 25-40% while these rates should have actually been increased by at least 30%," he said.

Duty drawback is the refund of duties on inputs imported for export items.

The government had recently rationalised the duty drawback and brought more items under the scheme for tax refund to exporters. It had reduced the rates for different engineering items.

The value addition norm used for computing the drawback rates has been raised from 33% to more than 250% in the most alarming way, Shah said.

"Thus, the advantage accruing to engineering exporters by rupee depreciation and benefits as compared to the Chinese yuan have been taken away," he added.

"The duty drawback rate cut is uncalled for and the nearly 13,000 members of the council vehemently protest this unfair treatment that is being meted out to the engineering sector," engineering exporters body EEPC India said in a press release.