Why in the news?
- The Government has extended the RoDTEP incentive scheme for exporters till 31st March 2026.
Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme
- What is it?:
- The scheme aims to reimburse embedded taxes and duties that are not refunded under any other mechanism, thereby making Indian exports more competitive.
- It was introduced on 1st January 2021, replacing the MEIS (Merchandise Exports from India Scheme) after WTO compliance issues.
- Why was it enacted?:
- Indian exporters faceD hidden, non-refunded taxes such as- Electricity duty, VAT on fuel used in transportation, Mandi tax, stamp duty, and Embedded Central/State levies not covered under GST.
- WTO ruling (2019) against MEIS (considered a prohibited export subsidy) led to a shift towards WTO-compliant RoDTEP.
- Key Features:
- The refunds are issued in the form of transferable electronic scrips / credits held in a digital ledger.
- The process is digitized: exporters declare the RoDTEP claim in the shipping bill, the claim is processed via customs, and credit scrips are generated via ICEGATE portal.
- The scrips can be used for paying eligible customs duties, rebates, or even transferred to other importers.
- Rates are Notified by the Ministry of Commerce for eligible sectors (generally 0.5%–4.3% of FOB value).
- Covers 85%+ of tariff lines, including labour-intensive sectors (textiles, leather, gems, agriculture, marine, handicrafts).
- Implementation Mechanism:
- Exporter claims refund at the time of shipping bill filing.
- Customs verifies and credits rebate in electronic ledger.
- Exporters can use credit for basic customs duty payment or transfer it to another importer.
- Advantages:
- Avoids the burden of compounding taxes and hidden taxes on Exporters.
- Makes Indian exports cost-competitive in global markets.
- Provides a level playing field vis-à-vis other exporting nations.
- Improves liquidity for exporters, especially MSMEs.
- Ensures WTO-compatibility (not a direct subsidy, but tax remission).
- Challenges:
- Limited coverage: Certain sectors excluded initially (steel, chemicals, pharma).
- Low rebate rates: Exporters demand higher rates to match actual embedded taxes.
- Budget constraints: Allocation often less than industry expectations.
- Complexity in rate fixation: Lack of transparency in calculation methodology.
- Way Forward:
- Expand coverage to all sectors with realistic refund rates.
- Periodic review of rates and sectors in consultation with exporters.
- Strengthen digital systems for faster credit issuance.
- Integrate with broader National Trade Facilitation Action Plan.