The department of revenue announced a new package to boost sagging exports of handicrafts on September 2. The erstwhile boom in handicrafts has been witnessing a decline, while exports of othert commodities is on rise. The new initiative covers glass and agarbatti crafts, apart from brass and copper art work to a certain extent.

The cries for justice from agarbatti manufacturers in Bangalore have yielded result. The drawback cap on agarbattis (incense sticks) was quadrupled from Rs. 6.30 per kg to 25 per kg, but the drawback rate applied on export value remains the same at 8.8% . But now the drawback will be available on agarbatti values till Rs. 284.09 per kg as against Rs. 71.59 per kg in the previous dispensation. A good incentive to export valueadded agarbatti, or, from the view point of the department of revenue, over invoicing ordinary agarbattis to get more drawback!

The push was extended to glass handicrafts industry concentrated in Moradabad/Khurja region. The new drawback rate cap will be Rs. 15 per kg as against the previous rate of Rs. 4 per kg. When calculated with the rate of 8% applied on export value, we can see that the government is ready to pay drawback on glass handicrafts up to the fob value of Rs. 187.50 per kg. Another good incentive to export valueadded glass art ware.

The drawback rate on brass handicrafts was stepped up from 9% to 11% . However, the cap drawback continues at Rs. 33 per kg. This does not give much relief to the industry given the high price of non ferrous metals in the world market. The rate for other articles of brass was also raised.

A new entry for stainless steel knife and other cutlery articles was created to give some justice (finally!) to the stainless steel utensil industry. Stainless steel utensils will now get a drawback rate of 11% with drawback cap of Rs. 24 per kg (stainless steel knife is capped Rs. 16 per kg). Apparently, the high prices of stainless steel and relatively high duty of the new material compared to carbon steel are the two reasons behind the hike. Stainless steel utensils are exported in large quantities to the overseas Indians, but somehow the item is always neglected in the incentive system and has to fight for its due place.

A new entry for physical exercise equipment with a drawback rate of 5% was inserted in the drawback schedule. This shows that India is keeping up with the changes in world demand.

Exports of made ups have diversified now to include goods from other fibres besides cotton. The drawback policy further rationalised to shift Durries and Rugs to a separate category from woven goods to the residual heading of 'other cloth covering'. The general rates for cotton durries and rugs at Rs. 16 per sq.mt get drawback and those from mostly other cotton at Rs. 95 per sq.mt cap drawback were specified.

Leather:

The drawback directorate amended the classification system for leather garments for the purpose of drawback. The relatively high rates for leather garments with a cap drawback value of Rs. 220 per piece will be allowed only where the share of leather in the outer visible surface of the garment is 60% or more. In other words, composite garments with cotton or synthetic fabric in the outer surface and leather in the inner surface will be treated as an article of textiles and sent to Chapter 62 to suffer the low drawback cap of Rs. 24 to Rs. 30 per piece depending on the material. The high value realisation due to presence of expensive leather in the inner layer will not be compensated. The change is definitely against principles of value based classification but the government chooses to see otherwise.

Apart from sheep and buffalo leather, drawback now includes other varieties in the schedule. For example, finished leather of kid will gets 6.3% drawback subject to a cap of Rs. 5 per sq.mt for finished leather and Rs. 2.75 per sq.mt for tanning leather. Similar dispensation for chamois leather and patent leather is also available now. Children size and adult size shoes have been defined in the chapter notes itself to reduce problems of classifications. There is a drawback cap difference of Rs. 45 per pair between shoes for children and shoes for adults.