Industry asked to approach DoR for higher benefits under export scheme

Amiti Sen New Delhi | Updated on August 26, 2021

Best rates offered to exporters given the budget constraints, says Commerce Ministry

Faced with the industry’s demand for increasing rates under the recently announced input duty reimbursement scheme for exporters and the inclusion of certain excluded sectors, the Commerce & Industry Minister has proposed that the requests be placed before the Department of Revenue for consideration.

The rates of reimbursement under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme announced by the government this month disappointed exporters as they are lower for many sectors than what they had expected based on their calculations of taxes paid. The RoDTEP rates are also mostly lower than the reimbursement rates under the Merchandise Export from India Scheme (MEIS), which it replaced, since the older scheme was non-transparent and hence, not compatible with WTO rules.

“At the recent meeting held by Commerce & Industry Minister Piyush Goyal with various industry bodies, representatives were informed that the best possible rates under the RoDTEP scheme were announced by the Commerce & Industry Ministry based on the available resources. They were asked to take their case to the Department of Revenue if they wanted more under RoDTEP,” an official tracking the matter told BusinessLine.

The Finance Ministry had sanctioned a limited budget of ₹13,000 crore for the RoDTEP scheme, as opposed to over ₹40,000 crore budgeted for MEIS when the scheme was functional, while it covered 8,555 items as compared to around 8,000 items under the MEIS.

Rates of remission

The rates of remission range between 0.01 per cent to 4.3 per cent of the exported value under the RoDTEP scheme, but a majority of items are entitled to 1 per cent or lower . Items entitled to 4 per cent or more are less than 400 with many textile items included in the category.

“There was no way the Commerce & Industry Ministry could give comparable rates under RoDTEP with such a low budget,” the official said.

Although, RoDTEP is supposed to provide for rebate of all Central, State and local duties/taxes/levies on exported goods which have not been refunded under any other duty remission schemes, including embedded taxes, exporters complain that the actual rates are not fully compensating for taxes paid.The iron and steel, chemicals and pharmaceuticals sectors have been excluded while initially there were no indications that they would be left out.

“The Commerce & Industry Ministry believes that the grievances of exporters can be addressed only by increasing the budget for the scheme and the Department of Revenue can take a call on the matter,” the official said.

The government has set an ambitious export target of $400 billion for the on-going fiscal as opposed to $292 billion of exports in 2020-21 and is looking at all possible ways to boost shipments.

Published on August 26, 2021

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