Govt likely to tweak RoDTEP scheme amid outcry over refund rates

The Department of Commerce may take a relook at the refund rates recommended by a government-appointed committee for the recently announced Remission of Duties and Taxes on Exported Products (RoDTEP). This is after an industry outcry over the suggested rates.
 
A person aware of the development said as much as Rs 30,000 crore would be needed for the RoDTEP, as compared to the Rs 13,000 crore allocated in the Budget. The finance ministry’s revenue department has also examined the recommendations of a committee chaired by former home and commerce secretary GK Pillai.
 
RoDTEP was announced in September 2019, with an aim to replace the export incentive scheme Merchandise Exports from India scheme (MEIS). This was after a World Trade Organization (WTO) ruling stated that the scheme violated provisions of the trade body as it was providing export subsidies for a wide range of goods.

 

The new scheme aims to refund to exporters the embedded non-creditable central, state and local levies paid on inputs.
 
These taxes were not being refunded till now. While the scheme was supposed to kick in from January1, 2021, the government is yet to notify the refund rates. “The notified rates, irrespective of the date of notification, shall apply with effect from 1 January, 2021, to all eligible exports,” the finance ministry had said in December.
 
“The GK Pillai Committee has taken a call in accordance with the parameters of the scheme. Rates recommended according to the RoDTEP scheme may require an annual budget of around Rs 30,000 crore. However, if it is fitted into Rs 13,000 crore, it could also mean that rates could be higher for some sectors and lower for others. The commerce ministry will take a final call before notifying the rates. It may have to relook or tweak rates, if required,” the person cited above said.

 
Exporters have urged the government to notify the RoDTEP rates soon and release funds required for the scheme. This would remove uncertainty from the minds of trade and industry. It would help forge new contracts with foreign buyers, Federation of Indian Export Organisations (FIEO) president Sharad Kumar Saraf had recently said.
Since the allocated budget for the scheme is lower, the rates under the RoDTEP scheme would be much lower as compared to the MEIS scheme or the coverage in terms of goods or sectors could be curtailed, analysts said.
 
“We have examined the GK Pillai Committee report. We are sending it to the department of commerce. Once the commerce (ministry) looks into it, the rates will be notified. It should happen soon. I completely understand that exporters are facing some hardship,” revenue secretary Tarun Bajaj had told Business Standard last week.