Govt to forgo Rs 50,000 cr on export promotion schemes

The government would forgo more than Rs 50,000 crore revenue in the current fiscal due to various export promotion schemes, said the Economic Survey, while calling for rationalisation of these schemes.

"Substantial revenue is forgone on account of the different export promotion schemes. In 2009-10, revenue forgone could continue to be significant at more than Rs 50,000 crore due to enlargement of the scope of schemes in the Foreign Trade Policy 2009-14 and improvement in the export promotion rates in the DEPB coupled with the bottoming out of the export fall," the Survey tabled in Parliament said.

As many as 2,000 products were added to Focus Market Scheme, New Market Scheme and other export promotion schemes in the FTP.

Commenting on the Survey observations, senior Finance Ministry adviser H A C Prasad, said while some exemptions are important, particularly to promote exports at this juncture, there is scope for reducing the duty forgone by rationalisation and convergence of these schemes.

Citing an example, the Survey said, currently capital goods imports draw duty of 7.5 per cent, while export promotion scheme for capital goods--EPCG--permit import of these goods at 3 per cent.

Prasad suggested reduction in import duty on capital goods to 3 per cent and simultaneous withdrawal of the EPCG scheme. This will reduce revenue leakages and give push to import of capital goods, he said.