The pharma exporters in the country have demanded to the union commerce ministry to initiate measures to extend the Duty Entitled Passbook (DEPB) scheme, which is an industry-friendly scheme, beyond June 30, 2011 till an alternative to the scheme is worked out between the government and the stakeholders.

In a 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.

The exporters concern in this regard comes in the wake of reports in a section of media that union finance minister Pranab Mukherjee has written a letter to union commerce minister Anand Sharma stating that DEPB scheme will not be extended beyond 30 June 2011.

Besides IDMA, Pharmaceuticals Export Promotion Council (Pharmexcil) has also asked the union commerce ministry to extend the DEPB beyond June 30. Supporting the pharma exporters' cause, Pharmexcil executive director Dr PV Appaji said that DEPB is a user friendly scheme and has benefited large number of exporters all through the years of its implementation. There are other schemes aimed at promoting exports like Duty Drawback, but the return/incentives available to the exporters do not compensate the actual. The rates of refund in the drawback scheme is much lower than those available under DEPB.

“DEPB scheme proved to have norms for several products, whereas Duty Drawback is limited to very few items and cannot substitute DEPB Scheme. Recently, Ministry of Commerce has also announced a Strategy Paper for promotion of exports from USD 10 (March 2011) to USD 25 billion (by March 2014). Pharmexcil is taking several measures for achieving the desired target of USD 25 billion and withdrawal/discontinuing DEPB Scheme at this juncture would adversely affect the exports. In view of the above, we request you to kindly continue the scheme till an equally good, exporter friendly, alternate scheme is put in place,” Dr Appaji in his letter to the DGFT said.

The DEPB scheme was first announced by the central government on April 1, 1997 under EXIM Policy 1997-2002. It is an export promotion scheme and envisages grant of DEPB credit entitlement to an exporter at the time of export at an ad-valorem rate notified by DGFT, in relation to FOB value of the export product.

These rates are based on the computation of basic customs duty suffered by the exporters on the inputs listed in the Standard Input-Output Norms (SION) applicable to the export product. The crucial feature of the DEPB scheme is that all the inputs listed in the SION are deemed to have been imported and to have suffered customs duties. DEPB rates are finalised by the DEPB committee, chaired by Additional DGFT and consists of representative from Ministry of Finance also. Value caps have been imposed on export products having DEPB rates of 15 per cent or more to curb the tendency of unscrupulous exporters to avail most of the runaway benefits by over-invoicing export.