In a concerted action involving ministries of finance, consumer affairs and agriculture, the commerce ministry withdrew or temporarily suspended tax refund scheme — Duty Entitlement Pass Book — late Thursday night.
“Total number of items on which DEPB benefits have been withdrawn would be running into about 40-50,” Commerce Secretary G K Pillai told reporters here. While the country was importing cement at zero duty, it has stopped the export incentives as a precautionary measure.

As for steel, he said: “When there is a shortage in the country and prices are high, why give export incentives.” Besides measures to discourage exports, the government is considering more fiscal steps to improve supplies and rein in inflation, he indicated.

Mr Pillai said an empowered Group of Ministers would be meeting on April 2 to consider measures for maintaining adequate supply line in the face of global pressure on prices. “The eGoM would be (reviewing) prices of rice, wheat and procurement of edible oil,” he said.

Duties reduced

The government has already reduced duties on import of different varieties of palm oil and the duty cut on soya oil would be one of the options to be considered by the eGoM.

In one shot, the government has also raised the minimum export price for non-basmati rice from $650 per tonne to $1000. While the government has imposed severe restrictions on rice exports, traders are sceptical whether the exports would stop. “There is a large shortage of rice even in international market and there would be demand for the grain at whatever price we ship it,” a leading rice exporter said.

DEPB scheme

Mr Pillai said that while export incentives are being stopped for the commodities which have a bearing on the domestic prices, the DEPB scheme would continue for another year.

The extension of the scheme was in the agenda of Thursday’s meeting of the Cabinet Committee on Economic Affairs but could not be taken up in the absence of Finance Minister P Chidambaram who was travelling abroad. “It (DEPB) would continue in the existing format,” he said.

However, the scheme under which exporters can trade their DEPB incentives in the form of transferable scrips had come under the scrutiny of World Trade Organisation (WTO). Since the WTO had questioned about the transparency of the scheme, it could be fine-tuned. In the absence of a decision on DEPB, exporters are in a confusion whether to shift to other tax refund alternatives.