Engineering goods exporters have expressed concerns that the steep 26-30 per cent cut in duty drawback rates provided by the Government as compensation for input duty paid by them will affect the shipments adversely.
EEPC India, the apex body representing engineering exporters in the country, has said that the cut in duty drawback rate is unfortunate as it has been made at a time when the sector is struggling to retain its hold in the global market.
“Such a sharp reduction in drawback rates will have a serious impact on engineering exports, particularly at a time when exports in the April-August 2013 period have fallen by 4.19 per cent,” EEPC India Chairman Aman Chadha said.
Engineering exports managed to climb out of the negative zone in August after several months of fall, but exporters are apprehensive that the lower drawback rates could reverse their fortunes.
The new drawback rates were announced through a Customs notification on September 14. These are based on the recommendations of an expert committee headed by Planning Commission member Saumitra Chaudhuri.
Hidden taxes
EEPC India contends that the duty drawback rate does not correctly measure the hidden taxes that exist on exported goods. Many local levies like Octroi, entry tax and electricity duties are not compensated for.
It has suggested that the drawback rate be increased by 25 per cent across the board to offset the handicaps faced by exporters.
Engineering exports contribute the second largest share to India’s export basket. The EU and the US account for 60 per cent of the total engineering exports from the country. During April-August, exports were to the tune of $ 22.6 billion.
amiti.sen@thehindu.co.in