The Indian Chemical Council (ICC) has sought an extension of the DEPB (duty entitlement passbook) scheme saying the industry is looking for support from the government to stay competitive in the global market.

“The Central government is neutralizing the impact of indirect taxes on input used for manufacture of export goods from domestic tariff area (DTA) through DEPB,” the ICC said in a letter to the Department of Chemicals and Petrochemicals (DCPC).

“Exporters prefer DEPB scheme over AA/DFIA or DBK scheme as the procedures under this scheme have been optimized and it is simpler for the exporters to avail this scheme as compared to AA or DFIA. Further, small exporters who are not in a position to import their requirement of inputs using AA or DFIA prefer DEPB scheme even if it requires additional working capital,” it said.

According to the ICC, the Indian chemical industry is looking for support from the government to stay competitive in the global market by “elimination of additional handicaps that we face both in fiscal and in infrastructure domains”.

“Our members believe that any saving on revenue out go with withdrawal of DEPB scheme would not be substantial since AA or DFIA scheme is also available to the exporters where DEPB rates have been fixed and withdrawal of the scheme will result in a switch to AA or DFIA scheme under which the exporter will import the inputs without payment of customs duties,” the DCPC said.

Multiple taxes and levies at central and state levels on inputs like feedstock, energy, capital goods, spares and consumables have significant impact on operating costs as compared to producers in other developing countries.

“It is therefore submitted that the DEPB scheme be extended to the date of implementation of goods and service tax (GST). Withdrawal of the scheme at this stage when we are faced with a likelihood of recession in global demand definitely needs to be avoided,” the DCPC said in its letter.