No plans of giving up on rebating State-level taxes, says Kamal Nath

New Delhi, April 11 The extension of the Duty Entitlement Pass Book (DEPB) scheme up to May 2009 notwithstanding, the Commerce Ministry has not given up on the plans for formulating a scheme that would also rebate State-level taxes, the Commerce and Industry Minister, Mr Kamal Nath, has said.

“No, we are not giving up the idea of rebating State-level taxes. There are certain issues. We are looking at a new scheme. The Finance Commission has also been tasked to look at trade issues,” Mr Nath told in an interview soon after the announcement of the final annual supplement to the Foreign Trade Policy 2004-09 here today.

The exporting community has for years been demanding that the State-level taxes be rebated to help improve their competitiveness in the international market.

On whether units in the software technology parks of India (STPI) would also get one-year extension of Section 10B benefits, beyond 2009, Mr Nath replied in the negative. “It is only for EOU units that this extension would be applicable,” he said.

The income tax exemption available to 100 per cent EOUs under Section 10B of the Income Tax law is to expire on March 31, 2009. The EOUs have got tax exemption for one more year, beyond 2009.

To curb inflation, the annual supplement has also announced the withdrawal of incentives under promotional scheme on export of cement and primary steel items. For primary steel items, Mr Nath highlighted that the incentives under the Focus Market scheme have been withdrawn. The idea is to discourage exports of primary steel and ensure their availability for the engineering sector.

On why cement exports have been banned, a measure done today and not part of the annual supplement announcements, the Minister said that the move would help augment domestic supplies. With the demand for cement expected to increase during April-June, he said that a ban on cement exports would to some extent improve availability and address the demand–supply mismatch.

On whether the Government plans to ban exports of primary steel or do away with customs duty on steel imports, Mr Nath said that more steps are on the anvil to tame inflation. He however ruled out ban on iron ore exports.

“The cabinet committee will consider appropriate measures on a realistic and holistic basis. I think inflation will be controlled. Production has not gone down in any of the items. State Governments have been urged to take steps so that they can fulfill their part and ensure that there is no hoarding or profiteering,” he said.

To a query on the cost to the exchequer for extending interest subvention by one more year, Mr Nath said that it would be Rs 1,050 crore during 2008-09 and would be passed on to the Reserve Bank of India.

On whether the annual supplement has addressed the issue of transaction cost reduction to the best possible extent, Mr Nath said that “large number of procedural issues had been taken care of. I took care of them in the last three years also”.