A slew of major export chambers and industry associations have written to the government to urgently revisit the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme and include a series of crucial export segments which have been currently excluded.
The chambers include the Federation of Indian Export Organisations, Engineering Exports Promotion Council, Indian Steel Association, Federation of Indian Mineral Industries, Alluminium Association of India, among others.
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Exporters say the entire community was desperately waiting for notification of RoDTEP rates over the last eight months. But the latest results have left them disappointed. Remaining India's foremost export incentive scheme since the WTO ordered the shutdown of the erstwhile Merchandise Exports from India Scheme (MEIS), RoDTEP has been live since January 1 but had remained inactive.
"There is high uncertainty arising for a large segment of exporters as the notified guidelines have excluded various key export segments from the purview of the RoDTEP Scheme, such as the exports from SEZs/EOUs, against Advance Authorization, DIFA, from non-EDI ports and bonded warehouses u/s 65 of Customs Act, 1962 which are crucial for the Indian economy," the export chambers said.
Contrary to the benefits available earlier, the ambit of the RoDTEP Scheme provides a much wider coverage with remission of embedded Central, State, and local duties or taxes that are not being rebated or refunded other than the Basic Custom Duties.
"Therefore, there is no justification for depriving the benefit for the aforementioned segments of exporters by exclusion from RoDTEP Scheme post-withdrawal of MEIS, which creates a double whammy for such exporters," they added.
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Grievances galore
SEZ/EOUs contribute to over 30 percent of the country’s exports and are bearing the high unrebated taxes and duties. All exporters of these, now excluded product groups, even made shipments under RoDTEP and got notional RoDTEP rates in their shipping bills. Their exclusion now is a deep blow to the exports sector.
"This is in stark contrast to the fact that the previous MEIS regime was applicable to these export categories and assured cost-competitiveness to Indian exporters. Additionally, since most SEZ/EOU locations are operating as non-EDI ports as of date, such exports through non-EDI ports also may be considered as part of the RoDTEP scheme," the chambers have said.
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Moreover, the Advance Authorization scheme only provides relief w.r.t Basic Custom Duty on import of inputs which are physically incorporated in export products and does not provide complete zero-rating of the exports. Even after availing of this scheme, the exporters still have to incur several costs, mainly in the form of direct taxes for electricity, freight, fuel, etc which will get embedded with the exporter’s cost if not remitted under RoDTEP.
On August 13, the Commerce Department announced the much-awaited new export refund rates under RoDTEP. It will cover 8,555 tariff lines, or individual merchandise products traded by India internationally. It aims to refund exporters' duties and taxes such as VAT on fuel used in transportation, Mandi tax, and duty on electricity used during manufacturing, which was so far not being refunded.
RoDTEP currently
The RoDTEP scheme is India's biggest, and realistically, only export promotion scheme. According to the government's own estimates, it is expected to significantly impact India's competitiveness, trade flows, and export numbers over the next 5-10 years.
Under the scheme, exporters would be given tax rebates, in the range of 0.5-4.3 percent. The rebate would be claimed as a percentage of the Freight on Board value of exports. The government has clarified that rebate on certain products will also be subject to a value cap per unit of the exported product
The refund would be credited to an exporter’s ledger account with Customs and used to pay Basic Customs duty on imported goods. The credits can also be transferred to other importers. Any exporter who wants to avail of its benefit will have to declare his intention for each export item in the shipping bill or bill of export.
Subhayan Chakraborty has been regularly reporting on international trade, diplomacy and foreign policy, for the past 6 years. He has also extensively covered evolving industry and government issues. He was earlier with Business Standard newspaper.
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