CAG Identifies Rs 479 Crore Revenue Risks in Export Promotion Capital Goods Scheme

ENA Sectors 2024-12-18 17:40:00 New Delhi, Dec 18 (KNN) The Comptroller and Auditor General (CAG) has released a comprehensive performance audit of the Export Promotion Capital Goods (EPCG) scheme, highlighting significant concerns about its implementation and monitoring. The audit underscores the need for more rigorous oversight of a program that allows businesses to import capital goods duty-free in exchange for meeting specific export obligations. The EPCG scheme permits duty-free importation of capital goods for pre-production, production, and post-production purposes, contingent upon exporters fulfilling predetermined export commitments. However, the CAG report identifies multiple critical areas of potential mismanagement and systemic vulnerabilities that require immediate attention. Key audit findings reveal substantial risks in the scheme's current implementation. Of particular concern is the potential for misuse through importing goods from multiple ports using a single authorisation, which could have significant revenue implications. The report recommends that customs and regional authorities implement more scrupulous monitoring and enforce stringent penal actions for non-compliance. The performance audit, which encompasses 72 observations and 26 recommendations, identified revenue implications totaling Rs 479.81 crore. Critical issues include incorrect fixation of Specific Export Obligations, inconsistent Average Export Obligation calculations across different financial years, and systemic weaknesses in the online application processing system. The audit critically examined the online facilitation measures, noting that the current digital system lacks robust document verification capabilities. While the system prompts document uploads, it does not effectively verify the authenticity of submitted materials. Additionally, the report found that extensions to export obligations were frequently granted routinely, without substantial evidence such as export orders or purchase contracts to substantiate the feasibility of meeting these commitments. The Directorate General of Foreign Trade (DGFT) and customs department are now faced with implementing comprehensive reforms to address these significant operational and procedural gaps. The CAG's recommendations emphasise the need for more stringent monitoring, precise export obligation calculations, and enhanced digital verification mechanisms to ensure the scheme's integrity and effectiveness. This audit provides a crucial assessment of a key government initiative designed to promote exports, highlighting the delicate balance between facilitating business growth and maintaining fiscal accountability. The findings call for a more nuanced and rigorous approach to implementing export promotion strategies. (KNN Bureau) 40308 https://knnindia.co.in/news/newsdetails/sectors/cag-identifies-rs-479-crore-revenue-risks-in-export-promotion-capital-goods-scheme 2024-12-18 17:40:00 knnindia.co.in CAG Identifies Rs 479 Crore Revenue Risks in Export Promotion Capital Goods Scheme