The Department of Revenue is vetting the duty refund rates for exporters proposed by the GK Pillai Committee in its full report on the new Remission of Duties and Taxes on Exported Products (RoDTEP) scheme and will take a call on whether to go with the suggested rates or lower them to keep expenditure in check, sources tracking the development have said.

“As long as the Department of Revenue sticks to the refund rates that have been proposed by the GK Pillai Committee, the Commerce Department should not have a problem in supporting and notifying them, as these have been scientifically calculated. In that case, the exporters’ wait for the rates would soon be over,” an official source told BusinessLine .

The RoDTEP rates have been calculated by the Pillai Committee based on all input taxes paid by exporters, including embedded taxes, that have not been refunded under any other scheme.

However, if the Department of Revenue decides to lower the rates, there is a possibility that the Commerce Department may have issues with it, the official added.

RoDTEP Vs MEIS

Exporters are aware that under the RoDTEP scheme, most sectors would not be eligible for a refund as high as the one they were enjoying under the Merchandise Exports from India Scheme (MEIS) that was discontinued from January 1, 2021 (simultaneously with the implementation of RoDTEP). However, they don’t want cuts beyond the rates suggested by the Pillai Committee.

“Exporters understand that RoDTEP is not the same as MEIS which was basically an incentive scheme and, therefore, an export subsidy disallowed by the WTO. But they want all their input levies to be refunded fully under the scheme, as recommended by the Pillai committee,” the official said.

Under the MEIS, exporters from a number of sectors would get refunds ranging from 2-4 per cent of the value of the exported goods. However, this calculation was not based strictly on input taxes paid.

The Pillai Committee’s suggested refund rates may be lower than the MEIS rates, but it may still be difficult for the Revenue Department to implement them within the budgeted ₹13,000 crore. The Finance Ministry had initially projected that the revenue foregone towards the scheme would be ₹50,000 crore annually.

“The funds could be increased if the Finance Ministry wishes,” the official said.

More funds needed

Exporters body FIEO wants the government to provide enough funds for RoDTEP and announce the rates soon. “RoDTEP is a scheme that is here to stay for some time. It is one of the few instruments available to support exports. Under all pragmatism, one should look into that aspect,” said Ajay Sahai, Secretary General, FIEO.

With exports of goods estimated to fall by 7.4 per cent (year-on-year) to $289.92 billion in fiscal year 2021, and outlook for the new fiscal still being uncertain due to the rising wave of the Covid-19 pandemic, exporters have been asking the government for more support.

Published on April 4, 2021