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Brand Rate Fixation-Brand Rates:Too cumbersome to claim? January 2017 issue

Brand Rate Fixation-Brand Rates:Too cumbersome to claim?

Duty drawback rates in India are mostly associated with All Industry Rates (AIRs) based on SION. And while there is a provision for fixing Brand Rates, why do only a few exporters opt for it? Are Brand Rates suitable for only those exporters who engage in value additions and suffer from significant wastage during the production cycle? Is AIR actually more realistic in addition to being simple? And is the ‘claim process’ the very reason why Brand Rates isn’t a popular option for Indian exporters?

Indranil das | January 2017 Issue | The Dollar Business

It’s a known fact that many governments across the globe, particularly those in highly protected economies, refund all taxes paid by an exporter – be it customs duty, service tax or excise duty – so that the products remain competitive in international markets. [China is the biggest example of how government incentives and subsidies can do wonders for the export sector]. And this process of refunding all taxes involved in the manufacturing/production process, once the export is completed, is called duty drawback.

In other words, duty drawbacks, essentially, are post-export replenishment/remission of duty on inputs used in export products. And India is no exception! To negate the impact of import duties, and to ensure that Indian products are competitive in global markets, the Indian government too had introduced the duty drawback scheme years back.

Under the duty drawback scheme, Indian exporters may avail remission through two mechanisms – the All Industry Rate (AIR) or the Brand Rate. AIR is essentially an average rate based on average volume and value of inputs [as per the standard input and output norms (SION)] and duties (both Excise & Customs) borne by them ...

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