The RoDTEP Scheme stands for Remission of Duties and Taxes on Export Products. It was introduced as a replacement for the existing MEIS (Merchandise Exports from India Scheme) and became applicable from January 1, 20211.
Purpose and Background: The RoDTEP Scheme was born out of a need to address a challenge posed by the United States in the World Trade Organisation (WTO). The US claimed that India’s export subsidy programs were detrimental to American workers. A WTO dispute panel ruled against India, recommending the withdrawal of these subsidy programs. To ensure WTO compliance, India introduced the RoDTEP Scheme.
The export subsidy programs recommended for withdrawal included schemes like Merchandise Exports from India Scheme, Export Oriented Units Scheme, Electronics Hardware Technology Parks Scheme, Bio-Technology Parks Scheme, Export Promotion Capital Goods Scheme, and Special Economic Zones (SEZ) Scheme.
Features of the RoDTEP Scheme:
Refund of Non-Recoverable Duties and Taxes: Under RoDTEP, exporters receive refunds for embedded taxes and duties that were previously non-recoverable. This includes taxes like Mandi tax, VAT, Coal cess, and Central Excise duty on fuel.
Automated Credit System: Refunds are issued in the form of transferable electronic scrips, tracked through an electronic ledger.
Quick Verification via Digitization: The digital platform speeds up clearance by verifying exporter records using an IT-based risk management system.
Multi-Sector Coverage: RoDTEP covers all sectors, including textiles, ensuring uniformity across different areas. Labor-intensive sectors that benefited from the MEIS Scheme receive priority.
Sector-Specific Committee: A dedicated committee decides the sequence of introducing the scheme across sectors and the extent of benefits for each sector.
Eligibility:
All sectors, including textiles, can benefit from the RoDTEP Scheme.
Labor-intensive sectors that previously enjoyed benefits under the MEIS Scheme receive priority.
Both manufacturer exporters and merchant exporters (traders) are eligible for RoDTEP benefits.
In summary, the RoDTEP Scheme aims to boost exports by ensuring refunds on previously non-recoverable duties and taxes, while adhering to international trade norms. Unlike previous schemes, RoDTEP provides direct cash compensation to exporters, making it easier to administer and reducing compliance burdens.
The RoDTEP scheme was introduced for most sectors (over 8,500 products) on January 1, 2021, but it excluded units in the SEZs and EOUs. Lack of adequate funds was one of the primary reasons for doing so, per the Government. The RoDTEP rates range between 0.3 percent and 4.3 percent.
The Centre, presently, is evaluating the financial feasibility of a proposal to extend export benefits under the RoDTEP scheme to units in export-oriented units (EOUs) and special economic zones (SEZs) and would decide based on the funds available.
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