Exporters, stung an uncertain international market, received a major relief with the government deciding to extend the benefits under the Duty Entitlement Pass Book Scheme (DEPB) by three months. DEPB was to expire on June 30.
"We have extended Duty Entitlement Pass Book (DEPB) till September," finance secretary Sunil Mitra told reporters.
The objective of the DEPB is to neutralise the incidence of customs duty on the import content of the export product. The neutralisation is provided by way of grant of duty credit against the export product.
Under the Duty Entitlement Passbook Scheme (DEPB), an exporter may apply for credit, as a specified percentage of freight on board (f.o.b) value of exports, made in freely convertible currency.
The credit is available against such export products and at such rates specified by the Drectorate General of Foreign Trade (DGFT).
The holder of DEPB has the option to pay additional customs duty, if any, in cash as well.
However he said that the scheme will be phased out and replaced by another scheme in October.
"It (DEPB) will be phased out (and) duty drawback will take its place. We have appointed a committee which we think will take a couple of months to decide all India drawback rates for items currently under DEPB," Mitra said.
The announcement would come as a relief for exporters who have lobbying for its extension.
Exporters can also ask for brand rate fixation, Mitra said.
The central government foots a bill of about Rs 8,000 crore in reimbursing exporters on duties paid on imported goods that are used in production of products that are eventually exported.