Centre may extend DEPB scheme to cars

Government sources said that, "The Government may extend the scheme to CKD/SKD and completely built units (CBUs) of cars in case auto majors seek any such benefits."

This is how the DEPB scheme works: If a company exports CBUs of two-wheelers valued at Rs 1 crore, it will get a benefit or credit worth Rs 16 lakh when there is import of components, etc.

For light commercial vehicles (LCVs) of gross vehicle weight up to 7.5 metric tonne, the DEPB benefit is given at 14 per cent of exports.

There is hardly any company which has starting exporting cars at present though lot of them have plans to do so. Also, under the MoU signed with the government, the companies have to fulfill their export obligation. This starts from generally the third year of operations of the manufacturer.

In the case of Hyundai Motor India for example, the export commitment start only from April 1, 2001, but the company has already started exports to Nepal and proposes to tap the markets in Sri Lanka, Bangladesh, Middle East, Africa and SE Asia.

Sources added, "The Government’s move if put in place will give a fillip to exports of cars."

The DEPB scheme is also applicable in case of exports of engineering goods. Moreover, the Government has also said that automobile companies which are under the purview of the MoU policy will have to fulfil their export obligations even after the quantitative restrictions on imports are removed. In the case of used car imports, the Government is not keen to allow them and is evolving a mechanism under which certain checks and balances will be in place when it is given the nod.