The Centre has no plans of re-working the popular Remission of Duties and Taxes on Exported Products (RoDTEP) scheme for exporters, despite the US government imposing anti-subsidy duties against it, as the problem was not with the WTO compatibility of the scheme but with the inability of exporters to provide adequate documents to US investigating teams, officials have said.

The Directorate General of Foreign Trade (DGFT) and the Directorate General of Trade Remedies (DGTR) are now working on familiarising exporters with the entire process of documentation so that they can establish that the RoDTEP payments are in lieu of input taxes not remitted under any other scheme and were not export subsidies.

‘Remission scheme’

“RoDTEP is a remission scheme and is fully WTO compliant. When US teams come to investigate, they come to the plants. The plant owners should be clear about the fact that it is not an incentive and specify that they are getting RoDTEP payments as a remission. And to that extent, they should be able to show documentation showing that they are paying all the taxes including electricity tax, VAT and mandi tax. We are now taking steps for general awareness building of the exporters,” the official said.

The RoDTEP scheme, announced in January 2021, replaced the WTO-incompatible MEIS scheme, which had faced several challenges from partner countries at the WTO as it was not transparently determined.

RoDTEP was designed carefully to ensure that it was totally transparent and the refund rates were based on embedded duties and taxes, such as VAT on fuel used in transportation, mandi tax and duty on electricity used during manufacturing of the exported items.

However, earlier this fiscal, both the US and the EU imposed countervailing (anti-subsidy) duties on Indian products, against RoDTEP payments availed. These include paper file folders, common alloy aluminium sheets and forged steel fluid end blocks by the US and certain graphite electrode systems by the EC. 

“Once exporters can show all documents on the input duties paid by them and it adds up to the RoDTEP payments, there won’t be a problem. The problem is that while the plants have records of total payments made by them in the form of input taxes, they may not have the details. For instance, in a hand-written fuel bill given by a petrol pump, it may not give disaggregated Central excide duty and State VAT charged. All this needs to be streamlined and the exporters properly trained,” the official said.

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