Acceding to the demand of the exporters, the Union Government has extended the popular duty entitlement pass book (DEPB) scheme for three months, but will be phased out gradually.


The scheme, which was to expire by June 30, 2011, will thus be effective till September 30. This export incentive scheme came into force in June 1997 with a view to neutralise the impact of basic and special customs duty on the import content of a product meant for export.


“We have extended the duty entitlement pass book (DEPB) till September 30. It will be phased out (and) duty drawback will take its place. We have appointed a committee which we think will take a couple of months to decide on all India drawback rates for items under DEPB,” according to finance secretary Sunil Mitra.


Under the scheme, exporters receive duty-free entitlements, which they can use to pay import duties. The entitlements are based on the value of goods exported. The government fixes the rate of the incentive. Exporters are also allowed to claim credit for the excise duty they pay on these domestic inputs.


The DEPB scheme cost the exchequer Rs.8,520 crore in 2010-11, more than 60 per cent of which were cornered by large engineering and chemical exporters. The government will save about Rs.4,000 crore if the scheme is scrapped.


The pharma exporters, as in other areas, have been demanding the extension of the scheme till an alternative was ready. In a recent letter to the Director General of Foreign Trade (DGFT), Indian Drug Manufacturers' Association (IDMA)'s international trade sub-committee chairman D B Mody said that DEPB scheme is most industry-friendly scheme and asked the government to continue the scheme till the alternate scheme is worked out in mutual consultation with the ministry.