It's status quo for Punjab exporters

DEPB EXTENSION: The proposed move will bring some relief but may not lead to export growth.

The exporters of Punjab believe that the extension of Duty Extension Pass Book (DEPB) for three more years as proposed by Anwar-ul Hoda committee will not have much of an impact on the state's exports.

While DEPB would help in maintaining the existing level of exports, exporters are not certain whether the extension would lead to an increase in the quantum of exports. Industry analysts point out that a mere extension of DEPB will not boost the state's declining exports, unless other factors responsible for the decline are also addressed.

Regional chairman of the Engineering Export Promotion Council (EEPC), S C Ralhan, said, "There are several reasons for Punjab's dwindling exports. The biggest is the tax sops given by neighbouring states like Himachal Pradesh, Jammu and Kashmir, making Punjab's cost of production higher by comparison. Punjab's geographical location means that goods meant for exports have to transported overland to ports. The exporter faces additional costs in freight charges. The combination of the higher production costs and such a geographical disadvantage have meant that goods from the state are much more expensive."

EEPC, Convener (hand tools panel), Sharad Aggarwal added, "The DEPB extension means that exporter input is neutralised. The Hoda committee proposal will definitely help exporters in maintaining the same level of growth."

However, with states like Himachal Pradesh, Uttar Pradesh and Haryana also giving freight subsidy for exporters, Punjab's exporters face an unfair competition.

For example, Uttar Pradesh grants Rs 10,000 per container to exporters as freight subsidy, but exporters from Punjab have to bear the entire cost themselves, Ralhan pointed out. Aggarwal suggested that CST and state level duties like electricity duty should also be included in DEPB.

During April-September 2005, exports of hand tools was $ 80.97 million, whereas in 2006-07, it was $ 80.59 million, a marginal decline. Cycle part exports too saw a decline from $ 185 million during 2005-06 to to $ 87 in April-September 06. Similarly fasteners too saw a one per cent decline in exports in the first half of 2006-07.

The lack of infrastructure in the state including a massive power shortage is another spanner in the works with many exporters not being able to meet their commitments.