RoDTEP: Electronics industry seeks 1.5% base rate

The electronics industry on Wednesday proposed a base rate for Remission of Duties and Taxes on Exported Products (RoDTEP) of at least 1.5 per cent in the electronics category, based on the minimum assumption of logistics and power costs in manufacturing.

Beyond this, individual products with high export potential should attract a higher RoDTEP rate, based on the level of domestic value addition, Indian Cellular and Electronics Association (ICEA) said in a report.

Globally, electronics is a $2 trillion industry, dominated by exports from China, Vietnam, Taiwan and Japan. Electronics is amongst the largest traded commodities after oil. It provides India with a big opportunity to become a global leader in exports.

RoDTEP is critical since the government is targeting $1 trillion in exports by 2025 as part of the $5 trillion GDP objective. No country has reached the $5 trillion mark without exports contributing at least 18-20 per cent and India is no different, it said.

However, India suffers several disabilities vis-à-vis competing destinations such as China, Vietnam and Thailand, which make India’s exports uncompetitive. RoDTEP, which replaces the Merchandise Exports from India Scheme (MEIS), is key to ensuring that Indian electronics exports regain the competitive edge. ICEA aims to make electronics India’s top export by 2025, it said.

The report said, till recently, over 370 electronic items received MEIS between 2-4 per cent.

“RoDTEP is critical to address India’s deep disabilities vis-à-vis its competitors for boosting electronics manufacturing and making it India’s number one export by 2025. This needs to be an ongoing exercise to address the adverse impact on India’s competitiveness, of high taxes which remain unremitted. Early finalisation of RoDTEP base rate and rates of priority products needs to be our immediate focus,” Pankaj Mohindroo, Chairman ICEA, said.

The report further said that several countries are already allowing remission of indirect taxes, levies and duties that are allowed under WTO. The rates estimated in the report identify the unremitted duties/taxes/levies at the Central, State and local level, borne by exported electronics products, including prior stage cumulative indirect taxes on goods and services used in the production of such products, the report added.