Economy

Centre working on identifying key sectors for priority implementation of RoDTEP scheme

Amiti Sen New Delhi | Updated on September 09, 2020 Published on September 09, 2020

Remission of Duties or Taxes on Export Product (RoDTEP) scheme aims at refunding exporters indirect taxes paid on inputs, and would also replace the popular Merchandise Export from India Scheme (MEIS) that is incompatible with WTO norms   -  istock.com/ugurhan

Commerce Ministry to make suggestions to RoDTEP committee

The Centre is looking to identify key sectors for priority implementation of the new Remission of Duties or Taxes on Export Product (RoDTEP) scheme, which aims at refunding exporters indirect taxes paid on inputs, and would also replace the popular Merchandise Export from India Scheme (MEIS) that is incompatible with World Trade Organization norms.

“The RoDTEP scheme will be available for all export items, but the process of data collection for fixing rates is laborious and time-consuming. That is why the scheme may be extended to a few priority sectors first and then subsequently to the rest of the items,” an official told BusinessLine.

The RoDTEP committee, set up by the Centre in July to work out the modalities for the new scheme, is in touch with the Commerce Ministry on the items that could be of priority and should be focussed on first.

“The committee has started collecting data for all sectors from the industry, export promotion councils and trade bodies. It is likely to focus on the items that the Commerce Ministry will suggest as priority for early implementation,” the official said.

Whether the priority list would be drawn on the basis of export value or incidence of indirect taxes, including embedded taxes, on various sectors, is to be seen, he added.

The Centre plans to withdraw MEIS, which has been ruled as being in violation of multilateral trade rules by the WTO, at the end of this year, and items that currently enjoy benefits under it would instead benefit under the RoDTEP scheme. However, it is not yet certain whether the scheme could continue for some more time in case there are items for which the RoDTEP rates cannot be fixed till the time.

‘Complicated process’

“The RoDTEP committee is seriously engaged in data collection. But fixing rates for reimbursing input taxes for thousands of items on the basis of actuals is a complicated process. We are sure that if all the rates are not fixed by the end of the year, the government will look at continuing older schemes for a while,” said a Delhi-based exporter.

Commerce and Industry Minister Piyush Goyal had earlier said that the taxes, duties or local levies imposed by the Centre, States or local governments that are not refunded through any other scheme, will be refunded through RoDTEP in a way that is compliant with WTO norms.

The new scheme also seeks to reimburse embedded taxes on purchases from main vendors, embedded GST on purchase from unregistered dealers, etc.

The government has already replaced MEIS with another scheme known as the Rebate of State and Central Taxes and Levies on Export of Garments and Made-ups (RoSCTL) for garments and made-ups as textiles was the first sector to be declared ineligible for MEIS by the WTO.

“Since RoSCTL is compatible with the WTO norms, there is no urgency to replace it with RoDTEP,” the official said.

MEIS goes against WTO norms as it is seen as an export subsidy where the incentive rates are not directly linked to reimbursement of indirect taxes on inputs.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on September 09, 2020
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.