RODTEP SCHEME

RODTEP SCHEME

Subject : Government Schemes

Context : As the government prepares to notify refund rates under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, exporters fear the rates may turn out to be lower than recommended by a technical committee.

Concept :

Remission of Duties or Taxes on Export Product (RoDTEP):

• The scheme was announced in 2020 as a replacement for the Merchandise Export from India Scheme (MEIS), which was not compliant with the rules of the World Trade Organisation.
• Following a complaint by the US, a dispute settlement panel had ruled against India’s use of MEIS as it had found the duty credit scrips awarded under the scheme to be inconsistent with WTO norms.
• The RoDTEP scheme would refund to exporters the embedded central, state and local duties or taxes that were so far not being rebated or refunded and were, therefore, placing India’s exports at a disadvantage.

Significance:

• Indian exporters will be able to meet the international standards for exports as affordable testing and certification will be made available to exporters within the country instead of relying on international organizations.
• Also under it, tax assessment is set to become fully automatic for exporters. Businesses will get access to their refunds for GST via an automatic refund-route.
• This would increase the economy for the country and working capital for the enterprise.

Extension of Benefits:

• The government has decided to extend the benefits of the RoDTEP to all export goods starting 1st January 2021.
• Initially, the scheme was expected to be limited to around three sectors to start with due to limited resources.
• The rates under this scheme, which are expected to be notified soon, will be applicable from 1st January 2021 to all eligible exports of goods.