DGFT to ring in changes in
FTP's deemed export benefits
THE deemed export benefit scheme,
under the Foreign Trade Policy (2009-14), is set to undergo a change in the wake
of its extensive misuse down the years, especially by power companies.
In this regard, the
Directorate-General of Foreign Trade (DGFT) will soon bring out the draft policy
to solicit the feedback of all the stakeholders, and subsequently ring in the
significant changes in the scheme.
It may be recalled that the
Ministry of Commerce and Industry had set up a committee in this regard, headed
by the Director-General of Foreign Trade, Mr Anup K. Pujari, in May 2011, which
also included representatives from the Department of Industrial Policy and
Promotion, Department of Economic Affairs, Reserve Bank of India and the
Department of Revenue.
The term 'deemed exports' denotes
those transactions where goods supplied to users do not leave the country and
the payment for these supplies are received either in Indian or foreign
currency, subject to several conditions. Such export benefits also include a
rebate on duty chargeable on imports or excisable material used in the
manufacture of goods supplied to projects.
Emphasising that the DGFT was
interested in creating a level playing field between domestic manufacturers and
exporters as the benefits were being misused since several years, Mr Pujari
intimated that it had now decided to make a clean break from last year's
decision to issue clarifications on the scheme, and instead relook the policy.
He also confirmed that the draft report was in place, adding that the DGFT would
be bringing it out soon.
The new policy may not only seek
to curtail benefits and provide them only to deserving suppliers, it could also
withdraw the benefits altogether. In 2010-11, the DGFT had intimated the Finance
Ministry about fake claims by certain suppliers, especially those firms
supplying boilers, turbines and generators.
While apprising that the DGFT had
uncovered that deemed export dues amounting to about Rs 5,000 crore were pending
in 2010-11, coupled with misuse of the benefits by a large number of companies
making fake claims, he said the government could have saved a substantial amount
by rectifying the discrepancy. He added that the DGFT had issued guidelines
clarifying the policy as companies had complained of ambiguity in the policy.
Stating that the revised scheme was expected to
focus on the relevance of import substitution in the present scenario and
equitable treatment between domestic and global suppliers, he added that the
move was aimed at saving a huge amount annually.
Source : Exim
News Service - NEW DELHI, June 21