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RoDTEP Scheme

Context:

Recently, the government had left out sectors such as iron and steel, chemicals and pharmaceuticals, from the Remission of Duties and Taxes on Export Products (RoDTEP) scheme.

  • These sectors were omitted from the scheme, as iron and steel were ‘already booming’ and the pharma industry’s business had also increased during the pandemic.

Relevance:

GS-III: Indian Economy (Growth and Development of Indian Economy, Taxation)

Dimensions of the Article:

  1. Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme
  2. Need for the RoDTEP Scheme
  3. Features of the RoDTEP Scheme
  4. Eligibility to obtain benefits of the RoDTEP Scheme
  5. RoDTEP Benefits

About RoDTEP scheme:

  • RoDTEP stands for Remission of Duties and Taxes on Export Products.
  • It replaced MEIS (Merchandise Exports from India Scheme).
  • 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.

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  • The panel further recommended that the export subsidy programmes be withdrawn.
  • This led to the birth of the RoDTEP Scheme, so as to ensure that India stays WTO-compliant.

The following were some of the export subsidy programmes recommended to be withdrawn:-

  • Merchandise Exports from India Scheme
  • Export Oriented Units Scheme
  • Electronics Hardware Technology Parks Scheme
  • Bio-Technology Parks Scheme
  • Export Promotion Capital Goods Scheme
  • Special Economic Zones (SEZ) Scheme
  • Duty-Free Imports for Exporters Scheme

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 scrips. 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. Additionally, a dedicated committee will be set up to decide regarding the sequence of introduction of the scheme across the various sectors, what degree of benefit is to be extended to each sector, and such related matters.

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, RoDTEP scheme applies to them as well.

RoDTEP Benefits

  • Being WTO-compliant, the RoDTEP scheme can make available from the government benefits to the exporters seamlessly.
  • The scheme is more exhaustive in that certain taxes that were not covered under the previous scheme are also included in the list, for example, education cess, state taxes on oil, power and water.
  • It will add more competitiveness in the foreign markets, with assured duty benefits by the Indian Government.
  • It will also help exporters meet international standards and promote business growth.
  • Also under RoDTEP, tax assessment is set to become fully automatic for exporters, hence, Businesses will get access to their refunds for GST via an automatic refund-route.

-Source: The Hindu

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October 2022
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