RoDTEP (Remission of Duties and Taxes on Export Products) is an export promotion scheme announced by Government of India. The Government released the landscape of RoDTEP scheme along with the rates on each eligible products. In this update, I have outlined such landscape, features, ineligible categories and remarks on the scheme.
Chairman-Mobile Advisory Committee, TMA
Board Member-African Tourism Board
Board Member-Film Federation of Ghana
Board Member-Ghana India Trade Advisory Chamber
Board Member-Malaysian Global Indian Economy Development Asso.
RoDTEP (Remission of Duties and Taxes on Export Products) is an export promotion scheme announced by Government of India that replaces the Merchant Exports Incentive Scheme (MEIS) and Rebate of State and Central Levies and Taxes (RoSCTL).
Exporters incur various costs in manufacturing export products. While some costs like GST and customs duties on imported raw material are either exempted or refunded, there are other costs as mentioned above that are still borne by the exporters. Such hidden costs add to increase the final cost of the products that are exported. This way, Indian exporters lose their competitive edge in terms of pricing in the international markets. To avoid this and make Indian exports more competitive vis-à-vis other exporting countries, the Government of India has introduced the RoDTEP scheme.
Why is RoDTEP needed?
In March 2018, the United States of America (US) had challenged the export incentive schemes of India at the World Trade Organization (WTO), claiming that these schemes are harming the American workers. On October 31, 2019, the panel set up by the Disputes Settlement Board of WTO has submitted its report recommending India to withdraw the various export incentive schemes that are in effect, including:
- Duty free Import Authorization Scheme (DFIA)
- Export Oriented Units Scheme (EOU)
- Electronic Hardware Technology Park Scheme (EHTP)
- Bio-Technology Park Scheme (BTP)
- Export Promotion Capital Goods Scheme (EPCG) and
- Merchandise Exports from India Incentive Scheme (MEIS)
Subsequently, the Government of India discontinued the MEIS scheme after March 31, 2020 and came out with a new scheme in the form of RoDTEP that complies with WTO guidelines.
Who is Eligible to apply?
Below are the criteria of eligibility for the RoDTEP scheme:
- Multi-sector Indian exporters are eligible under RoDTEP scheme.
- Both types of exporters (manufacturers and traders) are eligible to avail the benefits of RoDTEP
- All exporters whose export products are produced in India (even if the raw material used in manufacturing those products are imported).
- As of now, there is no minimum turnover restriction for this scheme. Even small exporters with very minimum export turnovers are eligible to avail the scheme.
- Priority is given to labour-intensive sectors that enjoyed benefits under the now-scrapped MEIS scheme.
- Exporters who operate via e-commerce platforms to export their goods are also eligible.
- Re-exports are not covered under RoDTEP. Any products that are brought in to special zones like the FTWZ for the purpose of re-exporting are not eligible for RoDTEP
- Products that do not have country of origin as India are not eligible.
- Exporters who are already availing benefits from incentive schemes other than MEIS and RoSCTL.
REVIEW OF RoDTEP SCHEME
The Government released the landscape of RoDTEP (Remission of Duties and Taxes on Export Products) scheme along with the rates on each eligible products. In this update, I have outlined such landscape, features, ineligible categories and my remarks on the scheme.
- The RoDTEP rates are decided considering non-creditable duties/taxes/levies at the Centre/State/Local level. It also considers the prior stage cumulative indirect taxes on goods and services used in production of an exported product.
- RoDTEP has been made effective from January 1, 2021, and MEIS has been discontinued.
- Applicability of the incentive is yet to be decided for products manufactured / exported by 100 percent EOU/FTZ/EPZ/SEZ and products manufactured/ exported in discharge of EO against AA, DFIA, Special AA.
- The rebate would be given as a percentage of the Freight on Board (‘FOB’) value of exports with a value cap per unit of exported product.
- Rebate will be in the form of transferable duty credit/electronic scrip, to be maintained in an electronic ledger. The e-scrips can be used only for payment of Basic Customs Duty (‘BCD’).
RoDTEP Rates Analysis
- The following table reflects the Chapter level changes:
|MEIS was available but RoDTEP not available now||MEIS was not available but RoDTEP available now||Scope Increased||MEIS was not available and RoDTEP also not available|
|Chapter 28, 29, 30, 61, 62, 63, 72 and 73||Chapter 10 and 43||Chapter 14, 15, 22, 93 etc.||Chapter 01, 02, 24, 25, 26, 27, 31, 47 and 77|
- The highest RoDTEP rate is 4.3 percent and lowest is 0.01 percent.
- The incentive rates are nothing compared to MEIS. The positive news, however, is that the RoDTEP covers 8555 ITC (HS) Codes whereas MEIS covered only 4914 ITC (HS) Codes.
- Export of imported goods covered under Para 2.46 of the FTP 2015-20 i.e. export of imported product in same or substantially the same condition.
- Exports through trans-shipment i.e. goods not entering India but routed through India ( Marchant Trade)
- Exports subject to Minimum Export Price (‘MEP’) or Export Duty.
- Exports which are restricted or prohibited under Schedule 2 of Export Policy in ITC (HS).
- Deemed Exports and Supply by DTA to SEZ/FTWZ.
- Products Manufactured in EHTP/BTP or a warehouse operating under Section 65 of the Customs Act i.e. MOOWR Scheme.
- Products manufactured and exported under Jobbing contracts [Notification No. 32/1997-Customs dated April 1, 1997].
- Exports from Non-EDI Ports.
- Goods taken into use after manufacture.
Issues needs to be taken up with DGFT/MeitY for their review/reconsiderations asap
- Rate of RoDTEP on mobile phones, especially for smart phone.
- Restriction applied on export from MOOWR/Advance Authorization Ruling should be waived off.