Sops to exporters on anvil

Sources said Finance Minister Chidambaram would unveil a package of incentives for exporters in the new budget.

Exporters in the Domestic Tariff Area (DTA) may get a better deal from Finance Minister P Chidambaram in his budget next week. The FM proposes to treat DTA units on par with 100 per cent export oriented units and those located in special economic zones with reference to service tax and excise benefits.

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Sources said Chidambaram would unveil a package of incentives for exporters in the budget. Commerce & Industry Minister Kamal Nath held extensive prebudget parleys with Chidambaram last week, it is learnt.

As per indications, exporters in DTA and 100 per cent EOUs may be exempt from levy of service tax on services availed for manufacture of products meant for export markets. Already such an exemption has been granted to the exporters in SEZs. Similarly, DTA exporters may be allowed to avail of the excise bonding facility currently available to those in SEZs and EOUs.

In effect, exporters in DTA need not pay cash upfront towards excise duty on inputs purchased for export manufacture. And, later claim modvat credit. The bonding facility would translate into making available excise-free inputs for DTA units exporting their entire produce for clients abroad.

The rationale behind the move is that while SEZs and 100 per cent EOUs are fulfiling their export obligations, many units located in DTA are exporting their entire produce without such stipulations, said a top official.

DTA units have sought similar treatment on par with SEZs and EOUs with regard to excise, service and income tax benefits and concessions. The FinMin, according to sources, is also considering the commerce ministry recommendation to exempt sale of DEPB credit from income tax.