Deemed Export Benefits For Power Project Suppliers

So far, projects in the areas of power, oil and gas were referred to the department of economic affairs (DEA) for a case-to-case approval for deemed export benefits.

These goods will now be eligible for refund of terminal excise duty as well as special import licence.

The SIL will be given at the rate of 6 per cent of the FOR value (excluding all levies and taxes). The present notification has done away with the case-by-case approval of power projects.

This is expected to give a fillip to indigenous manufacturers of capital goods and will help provide better infrastructure facilities in the power sector. The new measure will also save foreign exchange.

 

The Confederation of Indian Industry (CII) has been asking for the extension of deemed export benefits for the oil, power and gas sectors and has requested the DEA to issue the relevant notifications.

Deemed exports are normally eligible for the following benefits:

Duty exemption scheme

Deemed exports drawback scheme

Refund of terminal excise duty

Special import license at the rate of 6 per cent of the FOR value

Suppliers of capital goods to power projects will be entitled to the latter two.

Deemed exports include those transactions in which the goods supplied will not be taken out of the country and the payment for the goods is received by the supplier in India.

The government had already conferred deemed export status on the fertiliser sector.

The decision to extend it to the power sector has come after much dithering. Sources said that the revenue department has also reportedly not firmed up the revenue losses which would accrue as a result of the notification. Industry sources, however, estimate the losses at around Rs 150 crore, which they claim far outweighs the benefits of a level-playing field that would accrue to the Indian industry.