The Scheme for Remission of Duties and Taxes on Exported Products (RoDTEP), which was initially set to expire on 30th September 2023, has gained an extension until 30th June 2024. The existing rates applicable to exported items remain unchanged.
Understanding the RoDTEP Scheme
The RoDTEP Scheme has played a pivotal role in aiding India’s exporters. The scheme became operational on 1st January 2021 as a replacement for the Merchandise Exports from India (MEIS) scheme. This change was driven by a World Trade Organization (WTO) pronouncement that deemed the MEIS scheme as violating WTO regulations due to its wide-spread provision of export subsidies.
Under the RoDTEP scheme, rebates are provided based on the percentage of Freight On Board (FOB) value of exports. These rebates are issued as transferable duty credit/electronic scrip (e-scrip), the specifics of which are managed digitally by the Central Board of Indirect Taxes and Customs (CBIC). The RoDTEP Committee, under the Department of Revenue, is tasked with reviewing and recommending the limit rates for different export sectors under the scheme.
Main Objective of the RoDTEP Scheme
The primary objective of the RoDTEP Scheme is to offer comprehensive support to exporters by remitting duties and taxes incurred during the production and distribution of exported products. Crucially, the scheme encompasses taxes, duties, and levies at all levels – central, state, and local, which weren’t refunded through any pre-existing mechanisms.
Financial Allocation for the RoDTEP Scheme
For the fiscal year 2023-24, the Indian Government has assigned a substantial budget of Rs. 15,070 crores to back the RoDTEP Scheme. The Committee began its actions by engaging with Export Promotion Councils (EPCs) and Chambers of Commerce.
Understanding Freight on Board (FOB)
Freight on Board or Free on Board is a shipping term that designates the point in the supply chain when a buyer or seller assumes liability for the transported goods. FOB terms are specified in purchase orders between buyers and sellers to determine ownership, risk, and transportation costs.
In “FOB Origin”, the buyer accepts the product’s title at the shipment point and bears all risk once the product is shipped by the seller. Should the goods be damaged or lost during transit, the buyer is deemed responsible. Conversely, in “FOB Destination”, the seller retains the title of the goods and all responsibility during transit until the items reach the buyer.
Example Questions from UPSC Civil Services Examination
Question from Prelims 2020: With reference to the international trade of India at present, which of the following statements is/are correct?
1. India’s merchandise exports are less than its merchandise imports.
2. India’s imports of iron and steel, chemicals, fertilizers, and machinery have decreased in recent years.
3. India’s exports of services are more than its imports of services.
4. India suffers from an overall trade/current account deficit.
Select the correct answer using the code given below: (a) 1 and 2 only (b) 2 and 4 only (c) 3 only (d) 1, 3, and 4 only
Answer: D
Question from Mains 2017: Account for the failure of the manufacturing sector in achieving the goal of labor-intensive exports. Suggest measures for more labor-intensive rather than capital-intensive exports.
Question from Mains 2015: There is clear acknowledgement that Special Economic Zones (SEZs) are a tool of industrial development, manufacturing, and exports. Recognizing this potential, the whole instrumentality of SEZs requires augmentation. Discuss the issues plaguing the success of SEZs with respect to taxation, governing laws, and administration.