Policy

RoDTEP: Centre examining first part of GK Pillai panel report to see if caps needed

Amiti Sen New Delhi | Updated on February 04, 2021

The scheme is designed to reimburse input taxes, duties paid by exporters   -  tcly

Some items may be excluded from scheme

The Centre is examining the rates of input duty refunds proposed so far by the GK Pillai committee under the new (Remission of Duties and Taxes on Exported Products) scheme, which include items of leather, textiles, made-ups, automobile parts and iron & steel.

It is discussing if caps were needed on some, so as to not over-stretch the available budget, officials tracking the development have said.

“There is a likelihood that several items under categories such as petroleum products and gems & jewellery, that were not covered under the earlier Merchandise Export from India Scheme, will be excluded under the RoDTEP scheme,” an official told BusinessLine.

The committee, set up under former Union Secretary GK Pillai last year to calculate duty refund rates under RoDTEP, is expected to submit the second part of its report soon which may include suggested rates on another 2,000-3,000 more tariff lines, the official added.

The RoDTEP, which has been officially implemented from January 1, 2021, simultaneously with the withdrawal of the MEIS, is designed to reimburse the input taxes and duties paid by exporters – including embedded taxes, such as local levies, coal cess, mandi tax, electricity duties and fuel used for transportation – which are not exempted or refunded under any other existing scheme.

The MEIS, popular amongst exporters across sectors, had to be discontinued as a World Trade Organisation panel, following a complaint from the US. The panel ruled that the scheme was not in accordance with multilateral trade rules. Although incentives were provided under the scheme to off-set input taxes (which is allowed at the WTO), the rates (fixed between 2 and 5 per cent) were not directly linked to the taxes paid by exporters on intermediates.

Final decision

“Although RoDTEP rates for several items have been proposed by the RoDTEP committee, a final decision on the rates for these items can be taken once the government is able to settle on a final outlay for the scheme. Niti Aayog had earlier suggested ₹10,000 crore but now there are indications that the final amount would probably be around ₹18,000 crore. Since the initial estimates for RoDTEP was around ₹50,000 crore, there may be a need to put caps on the rates for certain categories to fit into the budget,” the official said.

Exporters are eagerly awaiting the announcement of RoDTEP rates as they complain that it is not possible for them to price their items competitively without knowing the amount of refund they would get. The refunds would be given to exporters retrospectively from January 1, 2021, irrespective of when the rates are announced but judicious pricing of export items would be a problem till rates are known, as per the Federation of Indian Export Organisations.

Published on February 04, 2021

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