Indian exporters currently enjoy certain entitlements like the duty drawback benefit, if the exports are made in freely convertible currency. The reimbursement of these duties is also available if the exports are supplied to a special economic zone (SEZ), even if the payment is realised in rupees.
The Centre has now been urged by ASSOCHAM, to extend the drawback benefits in SEZs against payment in rupees. ASSOCHAM is making this request, citing equal competitive opportunity for domestic players. According to a report in the Hindu Business Line, a recent press release stated that several SEZ manufacturers would prefer to source their inputs from the domestic industry rather than using duty free imports.
Their only condition was that the domestic players should follow strict global standards and remain competitive in terms of pricing. Domestically sourced inputs provide a huge advantage on account of remaining unaffected by foreign currency movements.
ASSOCHAM also made an observation that input sales become volatile when fluctuating foreign currency directly impacts realisations of the product. The Secretary- General of ASSOCHAM, DS Rawat, in representation of the Finance Ministry said: “Inputs sourced domestically should be encouraged by the Government, since the country saves foreign exchange involved in import of goods which the SEZ would have resorted to in the absence of appropriate domestic supplies.” Inputs for SEZs bought from domestic players, has several obvious benefits, yet the current scenario does not allow drawback benefits on these inputs.