To address anomalies in rates under the new input duty remission scheme for exporters, the Centre may ask the committee, under former Union Secretary GK Pillai, that calculated the rates, to examine if there are any discrepancies.
“The government has got consent of the members but a formal committee to address the anomalies in the Remission of Duties and Taxes on Exported Products (RoDTEP) is yet to be announced,” an official tracking the matter told BusinessLine .
The government announced rates under the RoDTEP scheme last month for remitting all input duties paid by exporters, including embedded taxes, after calculating taxes that went into the production and exports at every stage from raw material to finished product.
But many exporters from sectors such as handicrafts, engineering products and electronic items have complained that the rates fall short of the taxes paid by them, and must be enhanced.
The RoDTEP rates fall between 0.01 per cent and 4.3 per cent of the export value of a specific item and cover about 8,555 product lines. However, more than half the items are entitled to 1 per cent or less and fewer than 400 items get 4 per cent or more.
Previously, under the Merchandise Export from India Scheme, which RoDTEP replaced, the rates ranged between 2 per cent and 5 per cent.
“MEIS cannot be compared to RoDTEP as the rates of remission of duties under the scheme were not calculated specifically for each product and thus could not be transparently linked to input taxes paid. That is why the WTO ruled that it was an export subsidy and must go,” the official said.
However, the government doesn’t rule out that the grievances of some of the exporters related to the RoDTEP rates could be genuine and thus all complaints needed to be examined.
For instance, handicraft exporters, in a recent meeting with the Finance Minister, pointed out that the rates of refund ranging between 0.01 per cent and 2.4 per cent were much lower than the the 3 per cent and 5 per cent they estimate.
The Engineering Export Promotion Council, too, pointed out that the RoDTEP rates have not taken into account the taxes embedded in raw materials like steel in the engineering products in a large number of cases.
The Indian Electrical & Electronics Manufacturers’ Association has said that for a number of items, for instance electric cable and fibre optic cable, the rates of 0.8-0.9 per cent per metre did not fully cover the input duties and taxes on manufacturing and inland transportation costs,
Commerce & Industry Minister Piyush Goyal, in response to industry complaints, had earlier said that if some exporters felt that their product had not rightly received what is due to them, it would be examined by the independent committee. “It is not for the government or Ministry to finalise or settle across the table. It is a rational scientific process,” the Minister said.
The allocation for the RoDTEP scheme is ₹12,454 crore per annum as opposed to more than ₹40,000 crore per annum for MEIS.