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PEEVED exporters who have been unhappy about export sops being withdrawn by month-end may have something to cheer. At least one of the sops — the enhanced duty entitlement pass book (DEPB) rate — is likely to continue. While the finance ministry is withdrawing the interest rate subvention given to select sectors and the increased duty drawback payment to exporters, the commerce department is unwilling to slash DEPB rates to its earlier levels.

Commerce department officials said the 2% enhancement in the DEPB rate was announced in the annual foreign trade policy (FTP) earlier this year and should, therefore, stay till March 31, 2009. “The finance ministry is well within its rights to take back the other sops given to exporters to tide over the rupee appreciation crisis. However, the enhancement in DEPB rates was announced in the FTP for a one-year period. We will not withdraw it before the period expires,” an official said.

While the responsibility of interest rate subvention and payment of duty drawback vests with the finance ministry, it is the commerce department which makes DEPB payments.

Last year, both duty drawback and DEPB payments were increased by 2% as part of the overall bailout package for exporters. Exporters across sectors were hit due to the rupee appreciating by almost 15% in just a few months. Drawback and DEPB are input tax reimbursement schemes that reimburse exporters taxes paid on imported inputs and domestic taxes.

The reimbursement rate is pre-fixed by the government on a product-by-product basis.

Apart from enhanced drawback and DEPB rates, which was done across the board, exporters from select sectors worst affected by the rupee appreciation — like leather, handicraft and textiles — were given an interest rate subvention of 4%. Now, with the dollar appreciating again and breaching Rs 45 mark, the government is sticking to its deadline of taking away the sops on September 30, 2008.

However, with the commerce department stepping in and saying it would continue with the enhanced DEPB rates for another six months, exporters may not be deprived of all the incentives at one go.

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