NEW
DELHI: The government has sparked off its new DEPB-linked subsidy
scheme for farm exports with the humble gherkin. Other agricultural
exports that could take advantage of the subsidy include cut flowers,
pickles, jams and jellies, processed fruits and vegetables, and potato
flakes.
The
Exim policy announced by Union commerce Minister Arun Jaitley a fortnight
ago aims to compensate exporters for the fertilisers and seeds that
are used in growing a commodity. A higher DEPB (Duty Exemption Pass
Book) rate gives exporters higher compensation for imported inputs,
and thus allows them to price their products cheaper in the world
market.
Till
now they only get the flat 2 per cent DEPB for packaging material.
But with a new higher rate, selling their DEPB licences in the local
market will also fetch more.
Even
primary commodities like basmati rice are eligible, provided they
can prove that specific types of nutrients and seeds are necessary
for its cultivation.
The
only catch: the fertilisers/micronutrients mentioned have to have
a customs duty. Only then would they be rebated through the DEPB scheme
and exporters given additional subsidy.
Here’s
how the policy will operate. Exporters of a farm product have to ask
the DGFT’s advance licences committee to formulate new input-output
norms and the extent of value addition, which would include all the
special fertilisers, micronutrients and seeds used in its cultivation.
Gherkin exporters have already put in their application before it.
Once
the new SION formula has been derived, it would then go before the
DEPB committee to calculate the duty leviable based on the SION and
the new rate at which exporters would be compensated post-export.
“The
exporters have to show what special inputs they consume in producing
one kg of that commodity. However, it does not mean that individual
exporters have to be also importing them directly. Whether the special
inputs/nutrients are imported or sources locally, they are eligible
for inclusion in the DEPB rate if they have a customs duty levied
on them,” sources said.
Trade
analysts, meanwhile, say India has opened itself to challenge under
the WTO by declaring upfront that the DEPB scheme will now operate
as a indirect subsidy for farm exports. More crucially, it would lay
open Indian goods to anti-dumping duty in other countries. Instead
being explained away as reimbursement for unrecoverable taxes, exporters
of these farm products will now have to contend with charges of dumping
in foreign markets, sources said.
“The
government is obviously hopeful that the subsidy will be eventually
transferred to the grower through better prices. But as that is highly
unlikely, using this route to help farmers is ineffective. Instead
of helping farmers, India has only laid itself open to disputes with
our trading partners under WTO, by adopting this route,” experts said.
THE
TIMES OF INDIA NEWS SERVICE
[ TUESDAY, APRIL
15, 2003 05:49:08 AM ]
