Govt revisits micro issues as exports dwindle

There is good news for suppliers from the Domestic Tariff Area (DTA) to Special Economic Zones (SEZ). They can now get reimbursement of duty in lieu of duty drawback or Duty Entitlement Passbook (DEPB) even if the payment is received from the SEZ developers in Indian Rupees. It is not clear as to why this amendment does not allow this facility for supplies to SEZ units.

Rule 30(8) of the SEZ Rules, 2006 says that “Drawback or DEPB against supply of goods by DTA supplier shall be admissible provided payments for the supply are made from the Foreign Currency Account of the Unit.” The latest Commerce Ministry notification dated February 3, 2009 adds a proviso to this sub-rule that “the reimbursement of duty in lieu of drawback or DEPB credit against supply of goods by DTA supplier to SEZ developers shall be admissible even if payment is made in Indian Rupees.”

The DTA suppliers have to however, wait to know the manner of reimbursement of duty. The amendment says that the reimbursement of duty in lieu of drawback against supply of goods to SEZ developer shall be made as per the procedure prescribed by the Central Government.

The Commerce Ministry notification also says that the developer or co-developer shall strive to provide adequate housing facilities not only for the management and office staff but also for the workers of the SEZ Units. Provision of houses to workers is not a mandatory condition as the notification only wants the developers to ‘strive’. Foreign companies can also set up manufacturing units as their branch operations in the SEZ. Further, the exemptions, drawbacks and concessions on the goods and services allowed to a developer or co-developer shall also be available to the contractors including sub-contractors. The notification also deals with certain other procedural aspects.

The Director General of Foreign Trade (DGFT) has extended the benefit under the Focus Product Scheme to Frozen Fish Products. He has also clarified that tracking report, down loaded from the website of the shipping/airlines companies and duly certified by accredited agent(s) of the carriers in India is an acceptable document for the purpose of grant of duty credits under the Focus Market scheme and Market Linked Focus Product scheme.

The DGFT has also clarified that under the Export Promotion Capital Goods (EPCG) scheme, import of construction equipment shall only be permitted to service providers who use such equipment to provide the specified services and payments for the services rendered are received in free foreign exchange or in Indian Rupees which are otherwise considered as having been paid for in free foreign exchange by the Reserve Bank of India (RBI).

The RBI has now revised the interest rate ceilings on export credit in foreign currency and delegated to Authorised Dealers the powers to open Diamond Dollar accounts subject to fulfilment of more liberal conditions.

Importers who re-sell the imported goods can get refund of 4 per cent additional customs duty, subject to certain conditions. The Central Board of Excise and Customs (CBEC) now says that where the 4 per cent duty was paid through duty credit scrips issued under Chapter 3 of the Foreign Trade Policy, refund can be granted by way of re-credit to such scrips.

The fall in exports growth seems to have energised the government to take a look at the micro level issues.

tncr@sify.com