Major items on which drawback rates have been increased are readymade garments, hand tools, bicycle and bicycle parts, brass artware, brass hardware, leather and leather products, made-ups including handloom made-ups, and certain machinery items. The new rates will come into effect from Wednesday.

Referring to the special additional duty levied in the budget, the finance ministry release says the levy of 4 per cent SAD has been taken into account alongwith 5 per cent SAD applicable on various imported inputs. This will provide export products the necessary leverage to compete with products of South East Asian Countries where prices have fallen steeply on account of the collapse of currencies,it says.

The release adds that the increased drawbacks take into account ``the increased incidence of duties introduced on different inputs used by exporters.'' It hasbeen the endeavor of the finance ministry to ensure that exports do not suffer on account of high custom and excise duties, it says.

Highlights of the changes are as follows (i) the six new products which have been included are surgical blades, heat resistance rubber, non-computing registers, dual type, electrical motors and tennis rackets (ii) 219 items on which rates have been increased are items where duties have increased or the total incidence of duties have increased due to rise in input prices (iii) rates in respect of 238 products are being continued at existing levels as there is no change in input duties and prices (iv) rates of 290 products have to be revised downwards in view of reduction in duties and prices of inputs used by manufacturers (v) on handloom products rates have been revised upwards and the description has been revised to include all varieties of made-up articles.

This will enable exporters to earn drawback on any article including new varieties which are in demand in theinternational market (vi) draw back rates have been re-introduced for garments exported from EOU/EPZ units which have inputs on which duty has been paid (vii) the major benefit extended to all export products on which government had decided to restrict the Modvat credit availed to 95 per cent is a new provision in the drawback table which compensates exporters for the 5 per cent Modvat credit which cannot be otherwise utilised. This removes the disability of 5 per cent which was making inputs costlier to exporters (viii) in the case of handloom products, handicrafts including handicrafts of brass artware, finished leather, grey fabrics and other export products which are unconditionally fully exempt from excise duty, it has been decided to dispense with the need to produce certificates regarding non-availment of Modvat facility as a measure to simplify export procedures and pay drawback more expeditiously to exporters (ix) in respect of certain other products a circular has been issued on guidelines to befollowed for verification of Modvat availed.

The range of exports which will now get higher duty drawback is wide. This is because the special additional customs duty is being levied -- on top of the 5 per cent special customs duty -- on a large variety of imports which go into exports. Among the beneficiaries of higher duty drawback are thrust items like textiles, drugs and pharmaceuticals and electronic hardware.

On the flip side, duty drawback rates have been lowered for 290 items. This seems to be an economy drive. Apparently, duty foregone in favour of exports is large -- a consequence of efficient computerised settlement of drawback claims -- and is more than 25 per cent of annual customs revenue.