19 AUG, 2010, 04.40AM IST,ET BUREAU

All about exporters and duty-free scrips

The foreign trade policy, to be announced on Monday, is expected to offer more incentives to exporters to help them tide over the effects of a likely demand slump in their major markets such as the US and Europe. A large part of these sops are likely to handed out in the form of duty free scrips. ET takes a look at what these scrips are and how they work.

What are duty-free scrips?

Duty free scrips are paper authorisations that allow the holder to import inputs that go into manufacture of products that are exported or machinery used for producing such goods without paying duties equivalent to the printed value. For instance, if a duty free scrip is valued at Rs 10 lakh, the holder can use it to import such goods without paying duties up to Rs 10 lakh.

Who gets duty-free scrips?

Duty free scrips are given to exporters under various export promotion schemes of the government such as the focus product, focus market, market-linked focus product schemes and the vishesh krishi gram upaj yojana. Under these promotional schemes, incentives are given for ex-porting identified products and targeting specific markets fixed at a certain percentage of the export value.

It is also used to reimburse duties on imported inputs under schemes such as the DEPB scheme, the export promotion capital goods scheme, the duty free import authorisation scheme and the advance authorisation scheme.

Do the receivers of the duty-free scrips necessarily have to use these to import goods?

Duty free scrips are both transferable and non-transferable. If the scrips are transferable, the holder may not import goods himself but can sell it in the market at a discount. However, if the scrips are non-transferable and come with a actual-user condition, they have to be used by the holder to import inputs or capital goods duty free.

What determines whether the duty-free scrips would be transferable or not?

Duty free scrips are transferable for all promotional schemes except for the services sector’s Rs served from India’ scheme. They are non-transferable for all duty reimbursement schemes except the DEPB scheme.