In recent news, the Government has made the decision to extend the Scheme for Remission of Duties and Taxes on Exported Products (RoDTEP) to all exported goods, a move aimed at strengthening the country’s export industry.
About RoDTEP
The Remission of Duties or Taxes on Export Product (RoDTEP) is a scheme that was initially announced in 2020 to replace the Merchandise Export from India Scheme (MEIS). The latter was found to be non-compliant with rules stipulated by the World Trade Organization (WTO), a realization that came to light following a complaint issued by the United States. A dispute settlement panel from WTO had ruled against India’s use of MEIS, determining that the duty credit scrips granted under the scheme were inconsistent with WTO’s norms.
The newly introduced RoDTEP scheme seeks to provide exporters with a refund on the embedded central, state, and local duties or taxes that were previously not rebated or refunded. The absence of this rebate was putting the exports from India at a disadvantage.
The Significance of RoDTEP
This scheme will enhance the competitive ability of Indian exporters, as it provides affordable testing and certification within the country, eliminating the need to rely on international organizations. The RoDTEP also offers a fully automatic tax assessment for exporters. Additionally, businesses will be able to access their Goods and Services Tax (GST) refunds through an automatic route, increasing both the national economy and working capital for businesses.
Extension of RoDTEP Benefits
As of January 1st, 2021, the government decided to extend the benefits of the RoDTEP to include all export goods. Initially, due to resource limitations, the scheme was anticipated to only cover approximately three sectors. The rates under this scheme, which will be made public in the near future, will apply to all eligible exports of goods beginning from January 1st, 2021.
Reasons for RoDTEP Extension
The decision behind this extension is driven by the intent to boost the export sector within the country. Previously, refunds were not being processed, negatively affecting exports. This was reflected in the figures; India’s exports saw a decline of 8.74% in November, a steeper drop than the 5.12% decrease seen in October. With the extension of benefits under the RoDTEP, the government hopes to address and rectify these issues, striving for a more prosperous export industry moving forward.
