The main export promotion scheme of the Indian Commerce Ministry is RoDTEP (Remission of Duties and Taxes on Exported Products). The system intends to reimburse exporters for embedded national, state, and municipal tariffs and taxes paid on inputs that had not been repaid or rebated previously.
According to a declaration from the Directorate General of Foreign Trade, the government has decided to expand the RoDTEP scheme’s benefits to all items beginning January 1, 2021. (DGFT). RoDTEP was introduced in September 2019 to replace the Merchandise Exports from India (MEIS) scheme with the goal of increasing domestic exports.
This followed a World Trade Organization (WTO) finding that the MEIS system was in violation of WTO rules since it provided export subsidies for a variety of items.
Details/features of the RoDTEP Scheme
The new export incentive scheme comprises 8,555 export commodities at a cost to the exchequer of roughly Rs 12,500 crore. On 8,555 tariff lines, the refund rate is roughly 4% of the Free on Board (FOB) value. The RoDTEP rebate would not be available for duties and taxes previously exempted, credited, or remitted. According to the DGFT release, the RoDTEP plan will support eligible exporters at a defined rate as a percentage of FOB value. Some rebates for export products will be capped at a certain amount per unit of the exported commodity.
Customs will accomplish this using a less sophisticated IT system. The Central Board of Indirect Taxes and Customs will issue rebates in the form of a transportable duty credit/electronic scrip (e-scrip) stored in an electronic ledger (CBIC).
The strategy covers job-creating industries such as maritime, agricultural, leather, jewels, and jewelry. Other industries that benefit from the RoDTEP plan include automobiles, plastics, electrical/electronics, and manufacturing. The benefits do not apply to export commodities with a minimum export price, restricted and prohibited items, presumed exports, domestic tariff area units supplying goods to SEZs, or products created or exported by special economic zone units.
What is RoDTEP, and what are its objectives?
A frequently asked question is, “What is the RoDTEP Scheme?” The Remission of Duties and Taxes on Exported Products (RoDTEP) program benefits Indian exporters. After being announced by the Indian government the previous year with the purpose of enhancing Indian exports, the RoDTEP scheme went into effect in January 2021.
Under the RoDTEP plan, Indian exporters will be reimbursed for taxes and tariffs paid and factored into their export price, but not under any other system. The government intends to pay Indian exporters for taxes integrated in the export commodity price and were not returned, lowering its global competitiveness.
The RoDTEP program was approved in the aftermath of the Coronavirus-related slowdown, which saw Indian exports drop roughly 2% year over year from April 2020 to January 2021, with consecutive months of decline. This strategy is expected to correct this and boost exports in the future. The government’s RoDTEP plan rates demonstrate its concentration on products with low present export volumes but the potential to penetrate the international market.
What Is RoDTEP and What Are Its Benefits?
The following are the main features and benefits of the RoDTEP Scheme:
Reimbursement of taxes and charges that are not returned under any other program, such as fuel and toll taxes incurred in transporting export items, state duty on power used in their fabrication, stamp duty on import-export documentation, and APMC’s Mandi taxes, among others. The rebate is in the form of shareable electronic scrips recorded on an electronic ledger. A digital platform for quicker and efficient clearance as well as an IT-based risk management system have been built.
WTO compliance – The RoDTEP Scheme complies fully with WTO international trade agreements (and, as stated in a later section below, was created to suit their criteria). The refund rates under the RoDTEP plan range from 0.5 percent to 4.3 percent of the FOB value of products exported, with a per-unit maximum value cap.
The RoDTEP Scheme is a standardized, multi-sectoral scheme that ensures uniformity. The RoDTEP scheme has 8555 separate tariff lines with varied rates. A special committee will determine when and to what extent each sector will profit. The RoDTEP program isn’t particularly innovative. It is the MEIS’s replacement (Merchandise Exports from India Scheme).
What is the MEIS Scheme, exactly?
The MEIS program superseded an earlier export incentive program. It was established to reimburse Indian exporters for inadequate infrastructure and the costs connected with it. However, the World Trade Organization (WTO) concluded in 2019 that it was a subsidy and hence a breach of WTO regulations prohibiting governments from providing financial incentives to exporters.
As a result, the RoDTEP scheme was implemented as a WTO-compliant substitute; under it, exporters get reimbursed for non-creditable duty/tax charges (such as Electricity Tax, Stamp Duty, Mandi Fee, Fuel Tax, and so on) that are embedded in export goods but are not directly subsidized.
The following are the main distinctions between the MEIS and the RoDTEP schemes:
The first distinction is that the RoDTEP Scheme is based on WTO norms, but MEIS is not. Under MEIS, import tariffs could be paid with an arbitrary percentage of the export price. Exporters, on the other hand, receive a percentage of the price in the form of reimbursements under the RoDTEP plan, which is restricted to the embedded taxes.
When and to what extent each industry will profit will be determined by a special committee.
The RoDTEP program isn’t particularly innovative. It is the MEIS’s replacement (Merchandise Exports from India Scheme). The MEIS incentive was higher on average than the RoDTEP plan, which is based solely on actual taxes and levies embedded in the commodity and has a per-product-unit maximum limit. The MEIS Scheme was written on paper, but the RoDTEP Scheme is computer-based.
Participation in the RoDTEP Program Requirements
All sectors can profit from the RoDTEP Scheme. Priority sectors are labor-intensive industries that benefited from the MEIS program. Exports from manufacturers, EXIM merchant traders, Special Economic Zone Units, and Export Oriented Units are all eligible. The plan also applies to e-commerce exporters who use courier services. The RoDTEP Scheme has no minimum turnover requirement. The exported goods had to be made in India, and the nation of origin had to be India. The RoDTEP Scheme does not apply to re-exports.
Process and Documentation for Using the RoDTEP Scheme
To take advantage of the system, exporters must include a claim in their shipping bill along with a declaration. The Department of Customs subsequently processes and verifies the claim. Following that, a ledger with the approved amount is established and immediately accessible on the portal. The steps are as follows:
- Creating an account on the ICEGate interface is required for exporters (icegate.gov.in)
- Creating an electronic credit ledger The exporter must sign in using their class 3 Digital Signature Certificate (DSC) and build an electronic credit ledger by selecting the ‘RoDTEP option’ from the drop-down menu once the account has been created.
- The exporter should then write ‘RoDTEPY’ on the specific commercial invoice of the consignment that would benefit from the RoDTEP program, according to the Bills of Lading. This is required; otherwise, your refund request will be denied.
- The shipping bills are profiled RMS, scrolls are generated, and the amount is made accessible as credits on the ICEGate interface after the carrier uploads the Export General Manifest (EGM).
The exporter transforms portal credits into credit scrips and is assigned a unique Scrip ID. Every time a credit ledger entry is made, a new scrip is created. The refund is credited to and shown in the exporter’s ledger account. It can be used to pay reasonable duties and imports, as well as transfer funds to other importers. For the claim process, the following documents are required:
Shipping invoices- Certificate of Electronic Bank Receipt (EBC)
Class 3 Registration Cum Membership Certificate – Digital Signature Certificate (DSC) (RCMC)
If you’re an exporter, MBG Corporate Services’ experienced Indirect Tax domain experts can guide you through the whole RoDTEP claim process. For further information, please visit the website.