Exporters Shun Inflexible Passbook Scheme

The Duty Entitlement Pass Book (DEPB) scheme introduced by the commerce ministry to boost exports is yet to take off, with over 40 per cent of exporters opting for the quantity-based advance licensing scheme instead.

The scheme, which was announced in the new export-import (Exim) policy for 1997-2002, has not caught on because of three main reasons.

To begin with, the ministry has been lax in announcing the rates for the duty entitlement. Further, the scheme does not suit a large segment of exporters the garment exporters who have been arguing for a new sector-specific scheme.

And finally, exporters argue that the new scheme is more in the form of a substitute to the drawback scheme and does not have any of the elements of the earlier value-based scheme.

 

It is argued that the new scheme does not offer the flexibility of the old Vabal scheme, which has been scrapped.

Ministry sources also say that the sheer number of items has led to the delay in fixing rates.

However, the rates for a total of 1,192 items have now been fixed. The list includes 359 engineering items, 634 chemical items, 38 textile items, 65 electronic items, 71 plastic items and 25 leather products.

The sources are confident that the scheme will gradually pick up.

Director-General of Foreign Trade S B Mahapatra argues that exporters will benefit from the scheme, since the DEPB entitlement rates are, overall, 30 per cent higher than the drawback rates.

It is also pointed out that there is bound to be a time-lag in the data.

Under the post-export DEPB scheme (which has the higher duty entitlement rates the pre-export scheme allows a standard rate of just 5 per cent) credit can only be given after exports take place.