Government announces Rodtep scheme guidelines and rates of reward
The Government of India finally announced the guidelines and rates of reward for RoDTEP scheme today -17th August 2020. The government has allocated a Rs 12,400 crore outlay for the Remission of Duties and Taxes on Exported Products (RoDTEP) export promotion scheme.
The export refund rates under RoDTEP will cover 8555 tariff lines, or individual merchandise products traded by India internationally. The rate of reward announced by the Department of Commerce show that exporters will be given tax refunds in the range of 0.5-4.3% on the Free-on-Board (FOB) value of the products exported.
Products like gems & jewellery will have a refund rate of 0.01% whereas refund rates for shirt fabrics stand at 4.3%. Industries like steel, pharma and chemicals are out of the RoDTEP scheme. Additionally, exports made under Advance Authorisation, EOU and SEZ schemes are excluded from RoDTEP scheme.
This refund would be credited to an exporter’s ledger account and can be used to pay Basic Customs duty on imported goods. This credit is also transferable to other importers.
While RoDTEP took effect from January 1, 2021 the tax refund rates had not been fixed. Under the scheme, the government would refund to exporters the embedded central, state and local taxes and levies thus helping the sector gain edge over rivals in the global market.
RoDTEP scheme replaces MEIS Scheme that previously used to reward exporters with incentives equivalent to 2%-10% on the FOB Value of the export shipments by way of the MEIS duty credit scrips.
Mr. Ajay Sahai, DG & CEO, Federation of Indian Export Organisations (FIEO), commented that “We are happy because it provides predictability, stability and liquidity to exporters. Even if rates are low in some cases, they are based on the data furnished by the industry. So, what we are saying is that during the pandemic, industry also struggled to provide the data. If the industry can provide comprehensive and updated data, the Committee should look into increasing the rates if so warranted”.
The RoDTEP scheme will be India’s biggest, and realistically, only export promotion scheme. According to the government’s own estimates, it is expected to significantly impact India’s competitiveness, trade flows and export numbers over the next 5-10 years.
For more details on RoDTEP visit: RoDTEP Scheme for exporters
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