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In a move that will bring some cheer to rice exporters, the Finance Ministry has restored duty drawback after a span of nearly seven years.
However, this time round, the duty drawback will be extended under the concept of brand rate basis, which means that each exporter will have to separately apply to the Finance Ministry to get a rate approved, official sources said. Listed rice firms such as KRBL, LT Foods and Kohinoor may gain from this.
Duty drawback payments are made to exporters to compensate them for the customs and excise duties paid on inputs used in the manufacture of exportable products. Such payments are either made as all-industry rates (fixed as a percentage of free-on-board) or as brand rates.
“The Finance Ministry’s decision will help neutralise the duty suffered on packaging material by rice exporters,” Ajay Sahai, Director General and CEO of Federation of Indian Export Organisation (FIEO), told BusinessLine .
Difference of opinion FIEO, however, is of the view that the Ministry should extend all-industry duty drawback rates for rice exports, rather than provide brand rate, which will be company-specific.
Reacting to the move, Rajen Sundaresan, Executive Director of All-India Rice Exporters’ Association (AIREA) said the drawback will provide some relief to exporters.
“We have been demanding the drawback since 2008, when it was withdrawn. We re-submitted our demand seeking drawback about four-months ago,” he added.
The industry had argued that rice, which undergoes processing, should be extended the drawback as exporters of other grains such as maize and wheat are already getting such a benefit. India exported 10.9 million tonnes of rice, including basmati, in 2013-14, with shipments valued at $7.789 billion, a growth of 25.32 per cent over the previous year.
In the current financial year, from April till November, rice exports stood at 7.4 mt, valued at $5.12 billion. In December last, rice exports had seen a 7 per cent decline to about $725 million, industry sources said.
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