The department of revenue released two notifications on 18 November to liberalise drawback rates for the textiles and engineering sectors. The changes reduce the impact of some of the excesses of the specific rate cap regimes which limit the drawback outflow from the exchequer. The exercise is, however, limited only to some of the export items which remain in the news due to pressure from the strong lobbies. Other value added industries remain out of the all industry regime in the absence of proactive moves from the department of revenue. The new rate comes into effect from 21 November. Let export orders on or after this date will get the better rates of the 17 November notification.

Polypropylene, polyethylene

Following the rise in prices, the cap value on polypropylene resin was raised to a standard Rs 6 per kg with a 0.6 percent rise in the basic rate. Various types of HDPE and PP bags will fetch a uniform maximum drawback of Rs 8.50 per kg, the rise goes upto Rs per kg. There is a marginal increase of 0.4 percent in the basic rate also.

Leather bags

The cap value on the item is up by a handsome Rs 30 per piece. Each leather hand bag will get Rs 100 per bag maximum drawback on the base rate of seven percent. In other words the government is ready to give drawback on value going upto Rs 1330 per piece as against Rs 1,000 fob value in the previous dispensation.

Textiles package

Cap value increased on cotton yarn was from Rs. 2 to Rs. 7 per kg depending upon the count. Similarly, drawback rate are up by one percent and the cap value up by a good Rs. 4 to Rs. 6 per kg for cotton fabrics and Rs. 4 to Rs. 8 per kg for blended fabrics in the general case. Both segments get a good push from the Finance Minister. The rate for knitted fabrics was raised to 4 percent from 2 percent along with increase in the cap value to Rs. 12 per kg from Rs. 8 per kg. Made up rates too were rationlised to include all varieties apart from the normal bed sheets and curtains.

New entries for Lungis and Real Madras handkerchiefs were inserted. The best rate of drawback will be available on the two items regardless of whether in grey or dyed condition.

Value cap on cotton garments raised by Rs. 6 to 7 per piece from the existing level varying from Rs. 19 to Rs. 24 per piece. The basic rate, however continues as before. The value cap in the popular men’s shirt category is up by Rs. 9 per piece from the current level of Rs. 19 per piece. Only select categories consisting of men’s shirts ladies blouses, trousers and ladies dresses are covered.

Rate for imitation zari hiked from 5 to 6.5 percent and the drawback cap were also raised to Rs. 15 per kg.

A new entry for fishing nets was created. The rate on the item is 12 percent subject to cap value of Rs. 25 per kg.

Copper

Raw copper and copper alloys will get drawback at 5 percent compared to previous 4.5 percent while the cap rate was raised to Rs. 9000 per tonne from Rs. 7700 per tonne.

Forgings, hand tools

A new entry for forgings with a rate of 12 percent was introduced in the drawback schedule subject to a cap of Rs. 15 per kg for non alloy and Rs. 20 per kg for alloy steel forgings.

The rate for hand tools such as files and pliers have been raised significantly from 11 to 13 percent and the cap rate is also up to Rs. 20 per kg from Rs. 8 per kg. The rates for tools including spanners are up by 10.5 from 8 percent with near doubling of the cap to Rs. 16 per kg from Rs. 8.60 per kg. The cap for high speed steel tools is up to Rs. 45 per kg from Rs. 35 per kg.

Auto parts

Cap rate for auto parts raised steeply by 80 percent or so, the previous were in the range of Rs 17 per kg. Gasket rates raised from 4 percent to 7 percent without cap rate.

Bicycles

The drawback rates for bicycles were raised to a standard 10.5 percent from the current rate of 8 percent. What is even better, the cap rate nearly doubled to Rs. 175 per piece from Rs. 93 per piece. The accessories value can now be included in the bicycle value in the current dispensation. Bicycle parts rate was raised to 12.5 percent from 8 percent but the cap rate was lowered marginally to Rs 175 per piece from the current level. Further, number of specified parts are down to 23 from 95 in previous list. Residual parts other than the 23 specified ones will get a rate of 10.5 percent without drawback cap as compared to the previous rate of 8 percent which too was without drawback cap.

Furniture

Cap of 0.80 per kg on folding beds mild steel was removed. Wooden furniture can also get 2 percent drawback now.

Sports goods

Footballs and baskets balls of PVC or rubber steel get a higher drawback of 13 percent with cap of Rs. 13 per piece as against the previous rates of 10 percent and cap of Rs. 10 per piece. The rate for PU balls is the same as that for PVC and rubber but the cap value is higher at Rs. 52 per piece as against previous rate of Rs. 42 per piece.

Sports net get a higher drawback of 12 percent with Rs. 25 per kg cap as against previous rate of 9.5 percent and Rs. 10 per kg cap.

Ball pens

Last, the cap rate of ball point pen rose to Rs. 65 per 100 pieces while felt pen will now be subject to Rs. 180 per 100 piece cap. There is no change in the rate of 6 percent and 12 percent respectively.