The Hindu : Business : `New drawback rates to spur value added exports'

Online edition of India's National Newspaper
Wednesday, May 04, 2005

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Business

`New drawback rates to spur value added exports'

Special Correspondent

CHENNAI: : The Federation of Indian Export Organisations (FIEO) has welcomed the government's decision to express duty drawback rates in ad valorem terms, which would encourage value-added exports and reward exporters by way of higher unit price realisation.

In a statement, the President of the FIEO, O. P. Garg, complimented the Union Finance Ministry for conceding the demands of exporters. He said factoring the element of education cess and incidence of duty on HSD/furnace oil in the drawback calculation would help make exports more competitive. He suggested that incidence of State-level and local levies may also be factored in fixing the rates.

The adoption of the Harmonised System (HS) classification as the basis for fixing drawback rates would help avoid classification disputes.

Mr. Garg said inclusion of about 2,260 entries (as against 1,050 entries earlier) in the new Drawback Schedule and creation of a residual entry in various chapters would result in greater coverage of the scheme.

The Chairman of the Council for Leather Exports, M. Rafeeque Ahmed, said there was an overall increase in the DBK rates for leather and leather products, including non-leather footwear, and ceilings had also been raised to "realistic levels'' in the case of several items. The new rates would considerably neutralise the duty incidence on inputs.

Noting that the long-pending request of the industry to fix DBK rates for items like sofa covers and other upholstery products had been granted, Mr. Ahmed wished that the government had considered yet another request of the industry to notify separate rates for leather woven mesh/mats and leather woven belts/braids.

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