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

In News

• The Commerce and Industry Ministry is expected to unveil the new policy soon as the 2015 policy which is currently in operation is expiring on September 30 after being extended for two and a half years.

About the changes demanded in the scheme 

• Reimbursement: 
  • The industry chamber has urged the government that exporters should be specifically reimbursed on the basis of actual taxes and duties paid by them on outbound shipments.
• Export of Taxes:
  • Buying agents and consultants hired by foreign buyers are key intermediaries who facilitate exports of over billion-plus dollars for micro, small and medium enterprises (MSMEs), but their services are being taxed at 18% under the GST Act.
• Credit costs for smaller players:
  • There is an urgent need to restore the interest equalisation benefit of 5% to manufacturers in the MSME segment and 3% to all tariff lines as cost of credit is equally adversely impacting all exporters.
    • Currently, credit costs for smaller players are about 10%-11%.
• Other issues:
  • The scheme was supposed to take care of various duties and taxes outside GST that add to the cost of exports, but is unable to do so because of various anomalies, restrictions and very low rates.

RODTEP Scheme

• It was formed to replace the existing MEIS (Merchandise Exports from India Scheme).
• Aim: 
  • The scheme will ensure that the exporters receive the refunds on the embedded taxes and duties previously non-recoverable. 
  • The scheme was brought about with the intention to boost exports which were relatively poor in volume previously.
• 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. 
    • All the items under the MEIS and the RoSTCL (Rebate of State and Central Taxes and Levies) are now under the purview of the RoDTEP Scheme.
  • Automated system of credit
    • The refund will be issued in the form of transferable electronic scripts. These duty credits will be maintained and tracked through an electronic ledger.
  • Quick verification through digitisation
    • Through the introduction of the digital platform, the clearance happens at a much faster rate. 
    • Verification of the records of the exporters will be done with the help of an IT-based risk management system to ensure speed and accuracy of transaction processing.
  • Multi-sector scheme
    • Under RoDTEP, all sectors, including the textiles sector, are covered, so as to ensure uniformity across all areas.

Need for the RoDTEP Scheme

• The US had challenged India’s key export subsidy schemes in the WTO 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 be withdrawn. This led to the birth of the RoDTEP Scheme, so as to ensure that India stays WTO-compliant. 

Eligibility to obtain benefits of the RoDTEP Scheme

• All sectors including the textiles sector may enjoy the benefits of the RoDTEP Scheme. 
  • Labor-intensive sectors that enjoy benefits under the MEIS Scheme will be given a priority.
• Manufacturer exporters and merchant exporters (traders) are both eligible for the benefits of this scheme.
• There is no particular turnover threshold to claim the RoDTEP.
• Re-exported products are not eligible under this scheme.
• To be eligible to avail the benefits of this scheme, the exported products need to have the country of origin as India.
• 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.

MEIS vs RoDTEP

Source: TH