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RoDTEP scheme: Aluminium industry seeks 5% export rebate

Suresh P Iyengar Mumbai | Updated on March 04, 2021

A worker winds aluminium and iron wires used to making electrical power lines at a factory on the outskirts of Jammu (File photo)   -  REUTERS

Taxes alone account for 15 per cent of production cost, says association

The aluminium industry has urged the government to fix RoDTEP (Remission of Duties and Taxes on Exported Products) at 5 per cent and clear the uncertainty by notifying the rates soon to double exports to $10 billion.

Finance Minister Nirmala Sitharaman had announced RoDTEP to all export-oriented sector from January post withdrawal of the Merchandise Export from India Scheme (MEIS).

However, the government is yet to announce sector-wise remission rates. This has created a precarious situation and uncertainty for Indian exporters due to ambiguity in pricing of their goods in the export market.

In the recent Budget, the government has made a provision of just ₹13,000 crore for RoDTEP, which is much lower than ₹50,000 crore allocated when it was first announced in September 2019.

The situation aggravated further with withdrawal of MEIS. Exporters are unable to avail themselves of the MEIS benefit for exports already made in FY20 and this fiscal (up to December) due to shut down of online MEIS platform for registering claims, said the Aluminium Association of India in a letter addressed to Ministry of Commerce and Finance Ministry.

Also read: Aluminium lends sheen to low carbon future

This has resulted in blockage of significant funds for already stressed non-ferrous metal sector exporters, it added.

In absence of any export incentives, the aluminium exports are struggling to remain globally competitive as compared to the major exporting countries, especially China, which extends various support measures for export competitiveness.

In India, the high incidence of numerous un-rebated Central and State taxes, duties impedes the growth potential of the sector. Taxes alone constitute 15 per cent of aluminium production cost, which is among highest in the world, it said.

These duties and taxes cannot be exported. It should be remitted back to encourage domestic value addition and export of finished products, said the trade body.

Under MEIS, the aluminium exports were eligible for a 2 per cent rebate that itself does not provide ample cushion to remain competitive against current bearish market condition, it added.

The government support is crucial at this juncture to reduce burden of taxes with least five per cent remission rate under RoDTEP to boost exports and survive this challenging phase, it said.

Published on March 04, 2021

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