The delay in implementation of the new Foreign Trade Policy notwithstanding, the government is expediting work on expanding the coverage of the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, the important input duty remission scheme for exporters, seeking to extend it to some of the sectors and areas that had earlier been excluded, a person tracking the matter has said.
RoDTEP, which has been implemented from January 1, 2021 for exporters in place of the Merchandise Export from India Scheme (MEIS), has excluded certain sectors like pharmaceuticals, steel products, chemicals, and exports from Special Economic Zones and Export Oriented Units from its ambit. The MEIS was not compatible with WTO norms as its rates were not transparently calculated.
“Late last year, the Centre set up another committee under former Union Secretary G K Pillai to work out RoDTEP rates for areas and sectors excluded from the scheme. At a recent presentation made to the Board of Trade, the Commerce Department assured that recommendations for RoDTEP rates for AA and SEZ/EOU exports likely in December this year,” the source said.
In order to include certain sectors which were left out at the time of the introduction of the scheme, a Cabinet note is likely to be moved, the BoT was further informed.
The RoDTEP seeks to remit all duties, taxes, and levies, at the Central, State, and local levels, borne on the exported product, including prior stage cumulative indirect taxes on goods and services used in the production of the exported product. It also takes into account indirect duties, taxes, and levies in respect of the distribution of exported products.
Although RoDTEP rates, ranging from 0.3 per cent to 4.3 per cent, are lower than the remission rates under the MEIS scheme for most items, they are expected to pass muster at the WTO as the rates have been calculated meticulously and transparently, unlike in the MEIS scheme.
The US had complained at the WTO against the MEIS scheme, alleging that it was nothing but an export subsidy, and the multilateral body had ruled in its favour, saying that the scheme should be withdrawn.
Industry bodies such as the EEPC and Pharmexcil had been making representations to the government seeking inclusion of steel and pharmaceuticals in the scheme on the grounds that non-remission of the input taxes was affecting the sectors’ global competitiveness.
The G K Pillai panel was asked to determine RoDTEP rates for AA (advance authorisation)/EOU/SEZ exports; and to give a supplementary report/recommendations on issues relating to errors or anomalies with respect to the RoDTEP schedule of rates notified.