Policy

With more corpus, RoDTEP to pack more punch

Amiti Sen New Dehi | Updated on July 18, 2021

The Centre recently extended RoSCTL scheme for garments and made-ups sector for three years   -  Getty Images

With garments under RoSCTL scheme, about ₹7,000 crore may be freed up

The Remission of Duties and Taxes on Exported Products (RoDTEP) scheme is likely to get more attractive for beneficiary exporters as the garments and made-ups sectors are no longer competing for the limited funds available. The outlay, too, is set to be increased, an official tracking the matter has said.

“The Centre’s recent decision to extend the Rebate of State and Central taxes and Levies (RoSCTL) scheme for the garments and made-ups sector for three years instead of including them in the RoDTEP scheme will ensure that a considerable part of the RoDTEP outlay, possibly an estimated ₹7,000 crore, that was to be allocated to these two items, now can be used to remit input taxes to the other sectors,” the official said. Moreover, with pressure from the highest authorities, the Finance Ministry is also preparing to raise allocation, he added.

RoDTEP scheme

The RoDTEP scheme, announced on January 1 with the simultaneous withdrawal of the popular Merchandise Export from India Scheme (MEIS), seeks to refund exporters the embedded duties/taxes that are not rebated under other schemes. These include VAT on fuel used in transportation, mandi tax, and duty on electricity used during manufacturing. The rates of remission for various sectors, however, are yet to be announced. Exporters have been apprehensive about the final rates as the Finance Ministry had only allocated ₹13,000 crore for the scheme for fiscal year 2021-22. When compared to the ₹49,000 crore budget that was originally planned for the RoDTEP scheme and the fact that about that amount was annually distributed under the MEIS scheme, there were concerns that the ₹13,000 crore would not go too far.

“Following representations made by the Commerce Ministry highlighting that the budgeted amount would fall far short of the RoDTEP rates recommended by the GK Pillai committee, the Finance Ministry had reportedly agreed to raise outlay to ₹17,000-18,000 crore. But that too was not enough for the requirements,” the official said.

Funding scope

With exporters getting restless waiting for the RoDTEP rates, as lack of information has been affecting their pricing decisions, a number of high-level inter-Ministerial meetings, including PMO officials, were held recently and it was decided to increase the funding scope for the scheme, the official pointed out.

“The Finance Ministry now seems ready to part with over ₹20,000 crore annually for the scheme instead of the allocated ₹13,000 crore,” the official added.

What now needs to be seen is whether the RoDTEP will be extended to only the roughly 8,000 items covered under the MEIS or will there be enough funds to cover all 11,000 traded items.

A decision on placing caps on refunds also needs to be taken. India’s exports, after declining 7.26 per cent in 2020-21 to $290.63 billion due to Covid-19 pandemic disruptions, are back on track in the on-going fiscal. The government and exporting community, however, need to strive to attain the ambitious $400 billion export target set for 2021-22.

Published on July 18, 2021

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