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Exporters seek more benefits for value-added goods under Rodtep scheme

Sep 29, 2023

By: BlinkX Research Team

Under the government's flagship Remission of Duties and Taxes on Exported Products (Rodtep) scheme, exporters have sought more benefits for value-added goods.

The scheme's present structure offers greater refunds for "lesser value-added" goods, which exporters believe is against the government's policy of promoting value-added exports from the nation.

The value-added products of the same aluminum bars and rods are subject to a Rodtep return rate of 1.2%, according to the Federation of Indian Export Organizations (FIEO), the apex organization for exporters.

“We request that some thoughts should be given by adding some additional criteria to suitably reward the value-added exports under the scheme. In many instances, the value addition of even 100 percent gives less Rodtep entitlement as compared to the entitlement available for lesser value-added products,” the FIEO urged the commerce department in a written submission earlier this week.

The embedded non-creditable central, state, and local taxes that are paid on inputs to exporters are refunded by the Rodtep scheme. These taxes were incurred by export businesses during the production and distribution of exported goods rather than being refunded. 

The controversial Merchandise Exports from India Scheme (MEIS), which was replaced by the new program on January 1, 2021, was found to have violated the provisions of the World Trade Organization (WTO) by providing export subsidies for a variety of goods.

Since Rodtep is a duty neutralization scheme, similar to duty drawback, which also offsets customs charges, the FIEO has encouraged the government that the scheme should not have an end date. Currently, the scheme is valid through June 2024.

“The Rodtep scheme, along with duty drawback or duty exemption scheme toge­ther with goods and services tax refund mechanism, provides zero rating of Indian exports. The scheme fits into the WTO discipline under the Agreement on Subsidy and Countervailing Measures (ASCM),” the FIEO said.

Exporters have once more pushed for the Rodtep scheme to apply to all export-related industries, including those with any incidence of unrebated taxes and those operating in export-oriented units, special economic zones, or having advance authorization.