- The Remission of Duties and Taxes on Exported Products (RoDTEP) plan has been notified by the Centre, which claims that it would soon put “direct cash in the pockets of exporters.”
- The scheme, which covers 8,555 tariff lines and accounts for nearly 75% of traded commodities and 65% of India’s exports, has received a budgeted allocation of Rs 12,454 crore for the fiscal year 2021-22.
- RoDTEP is a programme that aims to assist exporters in making Indian products more cost-competitive and levelling the playing field in the global marketplace.
- It will take effect in January 2021, replacing the previous Merchandise and Services Export Incentive Schemes (MEIS and SEIS), which were found to be in breach of WTO rules.
- The new RoDTEP Scheme complies with all WTO requirements.
- It will compensate any federal, state, and local taxes, tariffs, and levies that are not currently repaid under any existing scheme but are incurred during the manufacturing and distribution process.
Such a scheme is required because:
- Last year, the initiative was unveiled as a substitute for the Merchandise Export from India Scheme (MEIS), which was deemed to be in violation of World Trade Organization standards.
- A dispute settlement panel had decided against India’s use of MEIS after the US filed a complaint, finding the duty credit scrips issued under the scheme to be in violation of WTO standards.
Highlights of scheme:
- All taxes, including those paid by states and even Gram Panchayats, will be returned under the system to enable zero rating of exports by ensuring domestic taxes are not exported.
- According to legal guidance, the rebates under RoDTEP are WTO-compliant and range from 0.5 percent to 4.3 percent of the Free On Board value of outbound consignments.
- Chocolates, toffees, and sugar confectionery have the lowest percentage, whereas yarns and fibres have the greatest rate.
- Steel, pharmaceuticals, and chemicals have been left out of the strategy since their exports have performed well without them.