A 57 per cent year-on-year growth in exports in May and 45 per cent-plus over the first two months of the current fiscal is something that would normally do any country proud.

But this unprecedented level of increase is still engaging the Centre's attention for a different reason – whether it is something ‘genuine' or has to do with the impending expiry of the Duty Entitlement Passbook (DEPB) export incentive scheme.

The fact that the export growth has come mainly from sectors such as engineering, chemicals and electronic goods – which are all major beneficiaries of the scheme – has not escaped the Commerce Ministry's eye, which is looking into the issue.

The DEPB scheme, which basically reimburses exporters on the duties paid by them on imported inputs, was originally slated to expire by end-June. Since the DEPB benefit is computed as a certain percentage of the free-on-board value of exports (which the exporters can then use for payment of customs duty on any importable good), there is an obvious incentive to inflate one's export earnings ahead of the scheme's expiry, official sources told Business Line .

There is also the possibility of exporters having entered into arrangements with their buyers to ship their goods in advance or even exporting to shell companies and parking their merchandise in warehouses abroad, they added.

That, in turn, could explain the stupendous growth rates recorded by a few sectors during April-May: Engineering, including auto (115 per cent), electronic goods (80 per cent), chemicals (44 per cent) and plastics/linoleum (46.3 per cent).

The Commerce Ministry is examining whether these growth rates in value terms has been backed by corresponding jump in volumes as well. Preliminary estimates suggest that only a few sectors have registered significant volume growth, with some even recording a fall, the sources said, while declining to give details.

Officials at the Directorate General of Commercial Intelligence and Statistics at Kolkata said they would take “at least three months” to release disaggregated export data in volume terms. The Federation of Indian Export Organisations (FIEO), the apex body for exporters, is currently undertaking a volume-based analysis of exports, even while pitching for a continuation of the DEPB scheme till the Centre manages to institute a nationwide Goods and Services Tax regime.

Intense lobbying by FIEO and trade houses led to the Centre recently extending the scheme's validity by three months till September. The Centre currently foregoes revenues of Rs 8,500 crore or so annually on account of DEPB, with around 70 per cent of the resulting benefit cornered by engineering, chemicals and man-made textiles.

arun.s@thehindu.co.in

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