'Teething troubles' prevent govt from announcing tax refund rates for RoDTEP scheme, says commerce secretary

Exporters complain that lack of clarity on tax refund rates under RoDTEP, 18 months after it was announced, continues to affect their business.

March 22, 2021 / 06:43 PM IST
Representative image

Representative image

A few 'teething troubles' are holding up the government from notifying the tax refund rates for the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, Commerce Secretary Anup Wadhwan has said. Addressing a press briefing on March 22, Wadhawan however stressed that exporters already broadly know what to expect from the scheme.

Going live from January 1, 2021, the RodTEP scheme is the government's foremost export incentive scheme now after the shutdown of the erstwhile Merchandise Exports from India Scheme (MEIS). It aims to refund to exporters the embedded duties and taxes such as VAT on fuel used in transportation, Mandi tax and Duty on electricity used during manufacturing, that were so far not being refunded. While the government has clarified that the rebate would be claimed as a percentage of the Freight on Board value of exports, it is yet to bring out the specific refund rates.

However, sources say that the rates are taking longer to be finalised given that the Commerce Department is working with a smaller-than-expected budget for the scheme. In the last national budget, Finance Minister Nirmala Sitharaman announced an initial allocation of Rs 13,000 crore for the RoDTEP. In 2020, the Finance Ministry had promised an outlay of Rs 50,000 crore, along with a similar formula as MEIS.

Exporters remain particularly irked at the government for not announcing the rate of tax benefits for even a single product under RoDTEP more than three months after it went live. Remaining in the dark about the amount of government support they may receive, exporters are unable to estimate their cost of production and therefore are currently facing difficulty in taking up foreign orders.

Moreover, exporters are yet to receive at least Rs 25,000-30,000 crore worth of tax refund under the erstwhile MEIS, according to apex exporters body the Federation of Indian Export Organisations (FIEO)."This will remove uncertainty from the minds of the trade and industry thereby forging new contracts with the foreigner buyers," FIEO President Sharad Kumar Saraf said.

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District focus

At the same event, the Director General of Foreign Trade (DGFT) Amit Yadav said products and services with export potential have been identified in 725 of the 745 total districts in the country. In his Independence Day speech in 2019,Prime Minister Narendra Modi had called for the conversion of each district into an export hub.

The move aims to involve state and district level stakeholders in export promotion activities. This decentralisation aims to boost local production and tap into the key insights from the grassroots. As a result of the greater synergy, district-wise export data is now being generated by the ICEGATE/DGCIS to track the export performance from each districts, the government said.

The DGFT added that institutional mechanism in the form of separate export promotion councils at state and district levels are being created to address the bottlenecks for export growth. Specific action plans to boost outbound trade are also being finalised by them in each district, with draft action plans having been prepared by DGFT's regional authorities in 451 districts.
Subhayan Chakraborty
first published: Mar 22, 2021 06:43 pm

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