RoDTEP Scheme

RoDTEP Scheme

Subject: Schemes

Context:

• The Centre has notified the rates and norms for the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme.

About the scheme:

• Announced in 2020 as a replacement for the Merchandise Export from India Scheme (MEIS), it ensures compliance with the rules of the World Trade Organisation.
• Aims to refund embedded central, state, and local duties or taxes, thus removing the disadvantage faced by Indian exports.

Key features:

• Aims for zero rating of exports by refunding all domestic taxes, including those levied by States and local bodies.
• Refunds under RoDTEP, deemed WTO-compliant, range from 0.5% to 4.3% of the Free On Board value of outbound consignments.
• Certain sectors like steel, pharma, and chemicals excluded due to their strong export performance.

Significance:

• Helps exporters meet international standards for exports with affordable testing and certification within the country.
• Aims to make tax assessment fully automatic, granting businesses access to GST refunds via an automatic route, thereby increasing the economy and working capital.

Free Trade Agreement (FTA):

An arrangement between two or more countries or trading blocs aimed at reducing or eliminating customs tariffs and non-tariff barriers on substantial trade between them.

Categories of FTAs:

• Preferential Trade Agreement (PTA)
• Comprehensive Economic Cooperation Agreement (CECA)
• Comprehensive Economic Partnership Agreement (CEPA)

Spaghetti Bowl Effect:

• The multiplication of free trade agreements (FTAs), supplanting multilateral World Trade Organization negotiations as an alternative path toward globalization.
• Coined by Jagdish Bhagwati in 1995.
• Criticized as counter-productive in promoting freer and more open global trades due to the proliferation of crisscrossing FTAs.
• According to Bhagwati, the proliferation of FTAs can lead to the adoption of discriminatory trade policies, reducing the economic benefits of trade.

 Ease of Doing Business

• World Bank’s Ease of Doing Business Report assesses business regulation across 190 economies.
• India became the top-ranked country in South Asia for the first time and third among the BRICS.
• Ease of doing business index annually released by World Bank in its Ease of Doing Business Report since 2004.
• 10 indicators include starting a business, dealing with construction permits, paying taxes, and more.