Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme

24.01.2024

Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme , Daily Current Affairs , RACE IAS : Best IAS Coaching in Lucknow 

Why in the news?

The Centre has no plans of re-working the popular Remission of Duties and Taxes on Exported Products (RoDTEP) scheme for exporters, despite the US government imposing anti-subsidy duties against it.

Key Point

This is because the issue was not with the WTO compatibility of the scheme but with the inability of exporters to provide adequate documents to US investigating teams.

What is the Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme?  

• It is a new scheme applicable from 1 January 2021 and is launched by the Ministry of Commerce & Industry to replace the existing MEIS (Merchandise Exports from India Scheme).
• The scheme ensures that the exporters receive the refunds on the embedded taxes and duties previously non-recoverable.
• It was introduced with the intention to boost exports which were relatively poor in volume previously.
• Under the scheme, a support of ₹27,018 crore has been extended for the 27-month period till 31 March 2023.
• The RoDTEP scheme operates under a budgetary framework and for FY 23-24, a budget of ₹15,070 crore is available to support 10610 HS lines at the 8-digit level.
• Currently, more than 10,342 export items are eligible for the RoDTEP benefits. Exporters receive these incentives in the form of transferable duty credit scrips, which can be utilised for settling import duties or can be sold in the market.

Objectives of RoDTEP

• Neutralise taxes and duties on exported goods
• Provide relief to exporters by reimbursing the costs of hidden taxes and duties
• Reduce the burden of input costs on exporters, thereby making India-made products and services more competitive internationally
• Promote, support, and encourage export activities in India by reducing the cost of exports
• Facilitate economic growth by reducing the tax burden on exporters.

Need for the RoDTEP Scheme:

• The US had challenged India’s key export subsidy schemes in the WTO (World Trade Organisation), claiming them to harm the American workers.
• A dispute panel in the WTO ruled against India, stating that the export subsidy programmes that were provided by the Government of India violated the provisions of the trade body’s norms.
• The panel further recommended that the export subsidy programmes (like the MEIS, Export Oriented Units Scheme, SEZ Scheme, Duty-Free Imports for Exporters Scheme, etc.) be withdrawn.
• This led to the birth of the RoDTEP Scheme, so as to ensure that India stays WTO-compliant.

Features of the RoDTEP Scheme:

• Refund of the previously non-refundable duties and taxes: Mandi tax, VAT, Coal cess, Central Excise duty on fuel, etc., will now be refunded under this particular scheme.
• Automated system of credit: The rebate is issued as a transferable electronic scrip by the Central Board of Indirect Taxes & Customs (CBIC) in an end-to-end IT environment.
• Quick verification through digitisation.
• Multi-sector scheme: Under RoDTEP, all sectors, including the textiles sector, are covered, so as to ensure uniformity across all areas.
• Labor-intensive sectors that enjoy benefits under the MEIS Scheme will be given a priority.

Eligibility to Obtain Benefits of the RoDTEP Scheme:

• Manufacturer exporters and merchant exporters (traders) are both eligible for the benefits of this scheme.
• The exported products need to have the country of origin as India.
• There is no particular turnover threshold to claim the RoDTEP.
• The Special Economic Zone Units and Export Oriented Units are also eligible to claim the benefits under this scheme.
• Where goods have been exported via courier through e-commerce platforms, the RoDTEP scheme applies to them as well.
• However, the re-exported products are not eligible under this scheme.                                          

                                              Source:  The Hindu Businessline