Industry sources said the reduction amounts to withdrawal of the stimulus package given in 2008-09 after the global financial crisis. The DEPB rates were revised upward as a stimulus in view of the slowdown in demand
New Delhi: As a setback to exporters, shipments of 1,100 items will be entitled to lower tax refunds from 1st October when curtains draw on the popular Duty Entitlement Pass Book (DEPB) scheme, reports PTI.
On export of these items, the tax refunds would be reduced by 1%-3%, finance secretary RS Gujral said while unveiling the transitory scheme for the DEPB scheme.
“As a transitory arrangement, these items will suffer a modest reduction in the existing DEPB rate to the extent of 1%-3%...” he said.
Industry sources said the reduction amounts to withdrawal of the stimulus package given in 2008-09 after the global financial crisis. The DEPB rates were revised upward as a stimulus, they said.
Since tax incentives for these goods will now be available under the Duty Drawback Scheme (DDS), the total number of items under the DDS would increase to about 4,000 from present 2,835.
While different avenues are available to exporters for refund of the duties, the DEPB is the most preferred route for its flexibility and attractive rates which average about 8%.
The government had spent Rs8,700 crore last year on DEPB refunds and engineering, chemical, pharma, textile and marine products have been the major beneficiaries.
With the withdrawal of the DEPB scheme, the government’s revenue forgone will be less, CBEC SD Majumdar said.
Since the DEPB scheme will not continue beyond 30th September, it has been decided to provide a smooth transition for these items (mainly engineering, chemical, pharma, textile and marine) while incorporating these in the drawback schedule.
Besides, the tax refunds for the items already under the DDS have also been reduced.
“The reduction is mainly on account of the reduction in basic customs duty on crude petroleum from 5% to nil as well as a reduction in central excise duty on diesel from Rs4.4 per litre to Rs2.4 per litre,” he said.
Of the 1,100 being shifted to DDS, there would be a ceiling of 5.5% tax refund rate on 660 items. However, the ceiling would not apply to 340 items including worsted woollen yarn, blanket, nylon twine, cut polished chat stones and polyester metallised film.
Though exports have shown a remarkable performance, growing by 54.2% between April-August 2011 to $134.5 billion, there are concerns that the momentum may not be sustained in the wake of increasing economic problems in the US and Europe.
Pranab Mukherjee hopes inflation reduces soon, leaving scope for growth in second half of fiscal
New Delhi: Union finance minister Pranab Mukherjee today said that the interest rate hike by the Reserve Bank of India (RBI) will help moderate inflation to a comfortable level without hurting growth.
“I am hopeful that the measures taken (by RBI) would get us back to a more comfortable inflation situation earlier rather than later... while (leaving) scope for growth to pick up in the second half of the year,” Mr Mukherjee told journalists.
The RBI today hiked interest rates by 25 basis points at its mid-quarter policy review which will make credit for business and retail loans costlier. This is the 12th time since March 2010 that the Bank has hiked rates in its continuing effort to curb inflation, PTI reports.
“Today's step is consistent with the RBI's monetary stance for the first half of 2011-12 and overall concern on growth sustainability in the medium term,” Mr Mukherjee said.
The RBI said in a statement after its review meeting that inflation would continue to be the guiding factor on deciding monetary policy and it projected a March-end inflation of 7%.
According to the central bank, inflation would cool only in the later part of the financial year. Overall inflation was 9.78% in August, up from 9.22% in July, which is way above the central bank’s comfort level of 4% to 4.5%.
In the context of mixed data on the state of the economy, Mr Mukherjee said headline inflation, which is above 9% over the past 12 months, continues to be a matter of concern.
“There are signs of growth (getting) affected by monetary tightening in recent days,” he said.
Industrial production fell to a 21-month low of 3.3% in July. The country’s GDP growth also slipped to an 18-month low of 7.7% in the April-June period.
Meanwhile, Maruti Suzuki said its Manesar plant will resume production on Sunday as it expects engines and components supplies to normalise after the end of strike at Suzuki Powertrain India
Gurgaon: Workers at three factories operated by two different subsidiaries of Suzuki Motor Corporation in India called off their two-day-long strike this morning after an agreement was reached with the management of the companies, reports PTI.
On Wednesday, workers at Suzuki Powertrain India and Suzuki Motorcycle India Pvt Ltd went on strike in support of their colleagues at Maruti Suzuki India’s (MSI) Manesar plant, who have been locked in a standoff with management authorities since 29th August.
Workers from Suzuki Castings—a part of Suzuki Powertrain India—who are affiliated to the Suzuki Powertrain India Employees Union, had also joined the strike.
“We have reached an agreement with the management and they have agreed to consider our demands sympathetically,” Suzuki Powertrain India Employees Union president Sube Singh Yadav told PTI.
Production resumed at the plant this morning and workers at Suzuki Castings have also resumed duties, he added.
Similarly, Suzuki Motorcycle India Workers Union president Anil Kumar said workers at the two-wheeler maker’s plant resumed duty this morning after an agreement was reached with the management.
Neither of them, however, specified whether the problem between the management and workers at Maruti Suzuki India’s Manesar plant has been resolved.
Yesterday, Maruti Suzuki had announced that it will shut down its plants at Manesar and Gurgaon today due to engine supply constraints on account of the strike at Suzuki Powertrain.
Suzuki Powertrain India employs over than 2,000 workers at its Manesar plant, where it manufactures diesel engines and transmissions for supplies to MSI. Suzuki Castings has nearly 700 workers.
Suzuki Motorcycles India has 1,400 workers at its plant near Manesar and rolls out about 1,200 motorcycles and scooters a day.
Meanwhile, Maruti Suzuki India said its Manesar plant will resume production on Sunday as it expects engines and components supplies to normalise after the end of strike at Suzuki Powertrain India (SPIL).
“Our focus now will be bringing the production to normal levels as supplies of components and engines will resume from SPIL. We will also further augment manpower at the Manesar plant,” a company spokesperson said.
MSI said, however, that its Gurgaon plant will not function on Sunday.
The company had yesterday announced that its factories at Manesar and Gurgaon will be shut today due to supply constraints of engines from SPIL due to the strike there.