They feel that the levy would force exporters to move away from the export markets to the more lucrative domestic markets.

Highlighting these and other related aspects in a letter to the commerce secretary PP Prabhu, the Plastic Export Promotion Council (Plexconcil), executive director, RP Kalyanpur said that the levy will not result in the DEPB entitlement rates or duty drawback rates (which are being revised upwards) to accommodate this levy. Exporters will not be inclined to opt for these schemes (unless one succeeds in getting higher export price to accommodate this levy-a highly improbable scenario).

Accordingly, the only option left for an exporter is the advance licence route which is full of hassles. This indicates that the DEPB scheme and the drawback route will in effect becomeinoperative.

Further, the exporters will be subjected to a loss equal to this eight per cent levy which can be `well be over 13 per cent of the CIF value' of imports. This may force the exporters to shy away from exports and divert their efforts more to the potential local markets.

Plexconcil has been advocating for a hassle-free scheme that frees all export inputs of all taxes to survive global competition. "We neither have a hassle-free scheme nor input level taxes free scheme," Kalyanpur said.

What is more, the Export Promotion Credit Guarantee (EPCG) scheme will result in developing exportable surplus which is very much required for the plastic sector. The eight per cent levy (which is understood to be applicable for imports under the EPCG scheme) coupled with the effects on the DEPB scheme will dissuade entrepreneurs and industrialists from investing in plant and machinery for generating exportable surplus.

There is a need to extend zero duty benefits under the EPCG scheme for imports of at leastRs 1 crore to the plastics sector to enable exporters to generate exportable surplus, Kalyanpur said.

"In the light of the above, we strongly recommend that exports should be exempt from any levy if we are to pursue a high export growth trajectory which implies that the eight per cent levy be either exempt for exports or be refunded to exporters. This assumes more relevance at a time when exports in general and the plastics exports in particular are experiencing a downward trend".

Meanwhile, plastic related exports during April 1997 to February 1998 has been placed at $344.30 million, minus 1.11 per cent from $348.19 million recorded in the same period last year.