RoDTEP - Remission of Duties & Taxes on Exported Products

Overview !

The RoDTEP Scheme came into existence because USA have challenged export promotional Scheme included in FTP in India at the World Trade Organization (WTO). USA argued that India is not complying with Articles of Subsidies and Countervailing Measures (SCM) Agreement and offering subsidies like the MEIS scheme which is an undue benefit to Indian exporters & it is against the WTO rules. As India lost the case at WTO, and the ruling was in favour of the USA. Also, WTO Instructed India to wipeout MEIS scheme and come up with a new WTO compliant scheme to help Indian exporters.

On 1st Feb 2020 Hon. Finance Minister in her Budget Speech had announced that Scheme for Remission of duties and taxes on export products would be launched.

On 13Th March 2020, the RoDTEP Scheme was approved by the Union Cabinet on 13th March 2020 and it was supposed to get into effect from 1St of April 2020 and will be applicable until 2025, but due to COVID-19, it was decided to continue with MEIS till Dec. 2020. All policy, benefit rates and procedure is already formulated and finalized.

• What is RoDTEP

RoDTEP (Remission of Duties or Taxes on Export Products). Basic rule of International Trade, only product can export duties and taxes cannot be.

Based on above this rule Indian products can be cost-competitive in the Global Market. Under RoDTEP scheme, Govt. aims to reimburse the embedded taxes. It will cover reimburse of levies that are refund you those duties and taxes which can be credited or exempted.

It will reimburse all the taxes/duties/levies being charged at the Central/State/Local level which are not currently refunded under any of the existing schemes but are incurred at the manufacturing and distribution process.

• Why Shifting to RODTEP

• USA have won the case against India in WTO
• WTO had instructed India to close down Export Incentives viz. EPCG, MEIS, DFIS, EOU and SEZ
• India had filed an appeal to WTO DRP on 19Th Nov. 2019 and from 10Th Dec. 2019 appellate body has become Dis-functional
• To Set off the cost of Indirect taxes and duties and to be more competitive in Global market India shifted to RoDTEP most Compliant scheme as per WTO guidelines
• The benefit of the scheme ranges from 2% to 8%.
• ROSCL and MEIS will be merged to RoDTEP

• How it will works

• DGFT is authorize to prescribe the manner for issue of duty credit for embedded duties
• DGFT will provide Electronic Duty Credit Ledger (EDCL) in the customs system to Automate the issue of benefit
• Duty credit can be used for payment of duties by person to whom it is issued
• It can be transfer to another person who can use it

• Rate of Rebate Under RoDTEP Scheme

• The rates are yet to be notified under the RoDTEP Scheme it is expected better than MEIS as Hon. Finance Minister Nirmala Sitharaman had budgeted Rs. 50,000/- Cr. under RoDTEP. In contrast, the allocations for MEIS were Rs 40,000/- Cr.
• It will be calculated as a percentage on Free on Board (FOB Value).
• Sectoral Norms Committee at DGFT is functioning as Sectoral RoDTEP Committees (SRCs) to determine, rectify, amend & recommend rates & value caps for various items under RoDTEP.

2020-07-07