RoDTEP

roDTEP- An Overview

RoDTEP, or Remission of Duties and Taxes on Exported Products, is a new scheme introduced by the Indian government to replace the existing Merchandise Exports from India Scheme (MEIS). It aims to provide a level playing field to exporters by reimbursing the taxes and duties incurred by them in the production and distribution of exported goods. RoDTEP covers a wide range of products and applies to all exporters, including small and medium enterprises (SMEs). The scheme has been designed to enhance the competitiveness of Indian exporters in the global market and promote the growth of the country’s exports.

What is RoDTEP Scheme?

RoDTEP Scheme stands for Remission of Duties and Taxes on Exported Products. It is a new scheme launched by the Government of India to replace the existing Merchandise Export from India Scheme (MEIS), which must be found to be compliant with global trade rules.

Under the RoDTEP scheme, exporters will be reimbursed for various duties and taxes not currently being refunded, such as state and central taxes, electricity duties, fuel used in transportation, and more. This will help make Indian exports more competitive in global markets by reducing the overall cost of exporting.

The RoDTEP scheme is expected to come into effect on 1 January 2021. It will be available to all eligible exporters in the country. It is expected to provide significant relief to exporters facing financial challenges due to the COVID-19 pandemic. It will help boost India’s overall exports.

Evolution of Export Promotion Schemes in India

Export Promotion Schemes in India have evolved over time, with policy and economic priorities changes.

Here are some of the key milestones in the evolution of Export Promotion Schemes in India:

Import Substitution (the 1950s-60s):

In the early years after independence, India followed a policy of import substitution, where the focus was on developing domestic industries and reducing dependence on foreign imports. The export promotion was not a priority during this period.

Trade Liberalisation (1991):

In response to a balance of payments crisis, India implemented economic reforms in 1991 that included trade liberalization. The government introduced a number of measures to promote exports, including the establishment of Export Processing Zones (EPZs), tax incentives, and the formation of the Export-Import Bank of India.

The Foreign Trade Policy (2004-2009):

In 2004, the Indian government launched a new Foreign Trade Policy (FTP) that aimed to increase India’s share of global trade. The FTP introduced a number of new measures, including the Focus Market Scheme (FMS), the Focus Product Scheme (FPS), and the Vishesh Krishi Gram Upaj Yojana (VKGUY), which provided incentives to exporters in specific sectors.

Goods and Services Tax (GST) (2017):

In 2017, India implemented the Goods and Services Tax (GST), which replaced a number of indirect taxes with a single unified tax. The GST had a significant impact on export promotion, as it replaced some of the previous tax incentives with a refund system.

The New Foreign Trade Policy (2021-2026):

The current Foreign Trade Policy, which was introduced in 2021, aims to double India’s exports of goods and services by 2025. The policy includes a number of new measures, such as the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, which provides refunds of certain taxes and duties paid on inputs used in exported products.

What Are Export Incentives?

Governments use export incentives to promote and support their country’s export industry. These incentives encourage more exports, enhance competitiveness in the global market, and ultimately boost the country’s economic growth.

Export incentives can come in different forms, such as tax rebates, subsidies, export financing, export credit insurance, and duty exemptions. The goal is to reduce production costs, improve product and service quality, and enhance the country’s export competitiveness.

Typically, these incentives are targeted at industries or sectors with the potential to significantly contribute to the country’s exports. Examples of these industries may include manufacturing, agriculture, information technology, and services.

Export Incentives and the World Trade Organisation

Export incentives are policies or programs governments implement to encourage companies to export goods or services. The World Trade Organisation (WTO) regulates global trade and has specific rules in place regarding export incentives. WTO members must report their use of export incentives to the organisation, and certain incentives are prohibited or restricted. The WTO aims to create a level playing field for international trade, and export incentives can distort competition and harm other countries’ industries.

Features of RoDTEP Scheme

  • Applicable to all sectors
  • Priority given to labour-intensive sectors
  • Present benefits under MEIS Scheme are at various rates of 2%, 3% or 5% of the export value
  • Discontinuation of MEIS Scheme from 1st January, 2021 and the introduction of RoDTEP scheme from the same date
  • Eligibility for manufacturer and merchant exporters as well as SEZ units
  • Exports under the Advance Authorisation and EOU Units are ineligible
  • No minimum export/turnover criteria
  • Goods exported through all methods are eligible
  • Country of origin rules apply
  • Re-exported products are not eligible
  • Fully automatic tax assessment
  • Real-time monitoring of clearance status through a digital platform
  • Can be used to pay basic customs duty on imported goods
  • Transferable credits to other importers

Eligibility for RoDTEP Scheme

  • Both manufacturer and merchant exporters (traders) are eligible for the benefits of the RoDTEP scheme
  • There is no turnover threshold required to claim RoDTEP benefits
  • Re-exported products are not eligible for benefits under this scheme
  • The exported products must have India listed as the country of origin to be eligible for the RoDTEP scheme
  • Special Economic Zone and Export Oriented Units are also eligible for benefits under this scheme
  • The RoDTEP scheme also applies to goods exported via courier through e-commerce platforms.

Categories Under the RoDTEP Scheme

  • Category A: includes products like agriculture, textiles, and handicrafts.
  • Category B: includes products with high employment generation potential, like marine products, leather, gems, and jewellery.
  • Category C: includes products with significant potential for export growth, like engineering goods, pharmaceuticals, and chemicals.
  • Category D: includes products with lower priority, like plastics, rubber, and ceramic.

Procedure to Apply for RoDTEP Scheme Online

  • Register on the DGFT website (https://dgft.gov.in).
  • Click the ‘Services’ tab and select ‘RoDTEP’ from the dropdown menu.
  • Click on ‘Apply for RoDTEP’.
  • Fill in the application form with the required details, such as the exporter’s name, address, contact information, and export product details.
  • Upload the relevant documents, such as export invoices, shipping bills, and bills of lading.
  • Submit the application form and documents.
  • Once the application is approved, the exporter will receive an electronic credit scrip, which can be used to pay for customs duties and taxes.

Documents required for RoDTEP Scheme

  • Export invoice
  • Shipping bill
  • Bill of lading
  • GST return filed under GST laws
  • Bank realization certificate
  • Certificate of origin of the exported goods
  • Any other documents as may be required by the Customs or DGFT authorities

Benefits of RoDTEP Scheme

WTO Compliant

RoDTEP scheme is in compliance with WTO trade norms, unlike the MEIS scheme.

Technologically Advanced

RoDTEP scheme uses an electronic credit ledger for maintaining input credits and RMS for risk-based profiling of shipping bills, reducing the need for physical intervention.

Multi-Sectoral

The RoDTEP scheme applies to goods from all sectors, ensuring uniformity in the country’s exports.

Fully Automated Refund Module

The Ministry of Finance has created a fully automated refund module for RoDTEP, which will reduce double taxation and claims for GST tax refunds and deemed exports. This will benefit both the public and private sectors.