Source: The Hindu
The government announced the restoration of the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme for exporters carried out by Advance Authorization holders, Export-Oriented Units, and units in Special Economic Zones. This move could significantly increase India’s export competitiveness.
The RoDTEP program, which was launched in 2021, compensates exporters for embedded taxes, levies, and tariffs that they would not otherwise receive under any other program. Benefits under the arrangement were offered until February 5 of this year, after which export organizations vigorously pushed for an extension.
The extension of RoDTEP benefits to AA, EOU, and SEZ units “reflects the government’s recognition of their critical role in India’s export ecosystem,” according to S.C. Rajan, president of the Federation of Indian Export Organizations. However, the Center stated that starting on June 1, 2025, the benefits would be reinstated. For a smooth transition, Mr. Ralph aimed to make them available starting on February 7, 2025.
Model Question:
Discuss the objectives and significance of the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme in promoting India’s exports. Also examine the challenges faced in its implementation.
Model Answer:
The Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, launched on January 1, 2021, replaces the earlier MEIS (Merchandise Exports from India Scheme) which was found non-compliant with WTO norms. RoDTEP aims to boost India’s exports by refunding embedded taxes and duties not rebated under any other scheme.
Objectives of RoDTEP Scheme:
- Neutralize hidden costs: Refunds taxes/duties such as VAT on fuel, mandi tax, electricity duty, etc., that are not refunded under GST or other schemes.
- WTO-compliant: Unlike MEIS, RoDTEP is aligned with WTO regulations, as it is based on actual incidence rather than fixed incentives.
- Enhance competitiveness: By reducing the cost burden, Indian exporters become more competitive globally.
- Automated and transparent: It is IT-enabled, with seamless credit issuance in the form of transferable duty credit scrips.
Significance:
- Supports MSMEs: Particularly beneficial for labor-intensive and small-scale sectors like textiles, agriculture, leather, etc.
- Improves trade balance: Encourages exports and diversifies India’s export basket.
- Incentivizes formalization: Promotes transparent and formal export activity due to its IT-based nature.
Challenges in Implementation:
- Budgetary constraints: Limited government allocation has led to lower-than-expected remission rates.
- Lack of clarity: Exporters complain about non-publication of clear guidelines or sector-specific remission rates.
- Delay in credit issuance: Technical glitches and procedural delays affect timely issuance of scrips.
- Exclusion of key sectors: Initially, sectors like iron & steel, pharma, and chemicals were excluded, dampening industry expectations.
The RoDTEP scheme is a step in the right direction to ensure WTO-compliant, efficient, and transparent export support. However, its success hinges on adequate funding, timely implementation, and wider sectoral coverage. Strengthening it further can help achieve the goal of making India a global export powerhouse.
