New Delhi, Sep 17 (KNN) Engineering Export Promotion Council (EEPC) and PHD Chamber of Commerce and Industry have expressed disappointment and concern over the proposed duty drawback rates for exporters and requested authorities to review the rates as they may affect shipments adversely.

“The EEPC India expressed a strong resentment and disappointment over the government decision to effect a steep cut of 26-30 per cent in the duty drawback rates, a shocking development that will make negative impact of rupee depreciation,” said EEPC India Chairman Aman Chadha today.

Further EEPC said, the drawback rates have been cut at a time when the export sector holds the most critical key for India’s vulnerable current account deficit (CAD).

It said the government should immediately re-fix the duty drawback rates on the basis of 33 per cent value addition in case of engineering goods.

The apex body representing Indian engineering exporters, EEPC India had suggested that the drawback rates be increased by 25 per cent across the board to offset handicapped exporters. Instead, the new rates have been lowered by more than a quarter.

“Exporters were expecting an increase of four to five per cent in the all industry duty drawback rates. However, the department instead of increasing the duty drawback rates has largely reduced them in the range of 0.3 to 1 per cent,” said Suman Jyoti Khaitan, President of PHD Chamber of Commerce and Industry today.

There has been a sharp decline in the drawback rates for electronic items, for instance the colour and black and white television sets, which have been reduced from four to one per cent. Duty on other electronic goods like loudspeaker has reduced from two to one per cent.

The nominal increase on products like wooden handicrafts, articles made from silk fabrics and artificial jewellery etc is a welcome step, Khaitan said.

“Due to weak rupee the import of raw materials used in various products being exported from India has become costlier,” she added.

Not only do exporters have to spend more money buying raw materials but they also have to pay import duties at the higher assessed rate.  The steep rise in input cost has resulted as a big loss to the exporters, she said.

Further, the President of PHD Chamber of Commerce and Industry has requested a review of the proposed rates and not to implement these until the rates are increased to the satisfaction of the exporting fraternity.

This is important in view of the already sagging and sluggish exports from the country in terms of dollar and current account deficit.

The new drawback rates were announced through a customs notification on September-14. These are based on the recommendations of an expert committee headed by Planning Commission member Saumitra Chaudhuri.

Aimed at promoting exports with fair and representative rebate of the incidence of customs and central excise duties and service tax related with the manufacture of export goods, the panel was set up for having interactions with EPCs and other stakeholders to recommend the duty drawback rates on the basis of relevant parameters, like prevailing prices of inputs, rates of duty and value of export goods. (KNN/GUNJ)