World Trade Organization Organisation Mondiale du Commerce Organización Mundial del Comercio

Australia 79, 80:

Paragraph 161, page 86 of the Secretariat report refers to the "drawback system in India" and states that "all industry" drawback rates on a number of products have decreased compared with those in force in 2009 10 and that "to discourage exports, and in line with measures taken by the authorities to contain increases in the domestic price of cotton, exports of cotton yarn (HS 5205, 5206, and 5207) have not been covered by the drawback schedule since April 2010."

75. 
    Could India clarify whether its drawback system provides a full refund of customs duties on the applicable imported goods and what other factors are taken into account apart from changes in tariff rate duties in reviewing and revising the amount of drawback?
    

Reply: Under the duty drawback scheme, the duty or tax chargeable on imported materials and used in manufacture of export goods is refunded to the exporters. In reviewing and revising the rates of drawback, the factors taken into consideration, apart from the changes in duty rates include: the average quantity of input materials and average of prices of input materials used in the manufacture of export goods, the average amount of duties paid on the input materials used in the production process including that paid on intermediate products and on materials wasted in the process of manufacture. The duties paid on packing materials are also taken into account.

75. 
    Could India explain the basis for altering the level of the drawback, to the extent that it is not payable on some products (particularly inputs to further manufacture) for extended periods (as in the case of cotton yarn)?
    

Reply: As mentioned above, in reviewing and revising the rates of drawback, the factors taken into consideration, apart from the changes in duty rates include: the average quantity of input materials and average of prices of input materials used in the manufacture of export goods, the average amount of duties paid on the input materials used in the production process including that paid on intermediate products and on materials wasted in the process of manufacture. For this purpose, detailed cost and other data is collected from the trade and industry and the administrative ministries. It is often noticed that the detailed cost and other data are not available for determining the duty drawback rates. In the absence of complete information, the drawback rates are not notified. It is relevant to mention here that the drawback rates are not notified in respect of several export goods.

Refund of duty paid on inputs used in the manufacture of exported goods under the drawback scheme is not the sole route available to the exporter for neutralization of duty incidence. The duty incidence on cotton yarn can be neutralized under other schemes, such as, under advance authorization scheme.