RoDTEP full form is Remission of Duties and Taxes on Exported Products. It was announced in 2019 and launched on 1st January 2021 by the Ministry of Commerce and Industry. Under this scheme, the exports will get the refund of embedded central, state, and local duties or taxes that were not rebated or refunded yet. This will be a major boost to India’s export and the domestic sector as it will provide Indian competitors with a level playing field with the global competitors.
What is RoDTEP Scheme?
The scheme Remission of Duties on Extort and Taxes was introduced on 1st Jan 2021, which is applicable to export products of countries. With the introduction of the RoDTEP scheme, it is expected that the taxes on export products will be reduced and a major boost will be provided to the Indian export sector.
India’s export subsidy was challenged in the World Trade Organisation by the USA, and thus, RoDTEP was introduced, which was World Trade Organisation compliant. Two schemes of GOI that were merged with this scheme were the Merchandise Export from India Scheme (MIES) and the Rebate of State and Central Taxes and Levies Scheme ( RoSCTL), which are WTO compliant.
Some of the Schemes that were recommended to be withdrawn were.
- Merchandise Exports From India Scheme
- Export-Oriented Unit Scheme
- Electronics Hardware Technology Park Scheme
- Scheme for Bio Parks of Technology
- Capital Goods System of Export Promotion
- Scheme for Special Economic Zone
- Duty-Free Import program For Exporters
Need for the RoDTEP Scheme
The US had challenged India’s key export subsidy schemes in the WTO (World Trade Organisation), claiming them to harm the American workers. A dispute panel in the WTO ruled against India, stating that the export subsidy programmes that were provided by the Government of India violated the provisions of the trade body’s norms. The panel further recommended that the export subsidy programmes be withdrawn. This led to the birth of the RoDTEP Scheme, so as to ensure that India stays WTO-compliant.
The following were some of the export subsidy programmes recommended to be withdrawn:-
- Merchandise Exports from India Scheme
- Export Oriented Units Scheme
- Electronics Hardware Technology Parks Scheme
- Bio-Technology Parks Scheme
- Export Promotion Capital Goods Scheme
- Special Economic Zones (SEZ) Scheme
- Duty-Free Imports for Exporters Scheme
Objectives of RoDTEP Scheme
- To access the availability of easy refunds of various taxes to exporters
- To reduce the cascading effect in taxes, i.e., tax on tax, by providing an automatic refund route
- To help exporters meet international standards and improve the quality of exports
- Another objective was to make it more exhaustive by adding taxes that were previously excluded, such as education cess, and state taxes on power, oil, and water.
Features of RoDTEP Scheme
- The RoDTEP scheme provides for the remission of duties and taxes paid on goods exported from India. This includes central, state, and local levies, as well as embedded taxes.
- The RoDTEP scheme uses an automated system to provide credit to exporters. This system is designed to be quick and efficient. It minimizes the paperwork required.
- The RoDTEP scheme uses digitization to verify the eligibility of exporters for credit. This process is quick and efficient, and it helps to reduce fraud.
- The RoDTEP scheme is a multi-sector scheme. This means that it covers a wide range of goods exported from India. This includes both manufactured goods and agricultural products.
- The RoDTEP scheme is WTO compliant. This means that it does not violate any international trade agreements. This ensures that the scheme will not be challenged by other countries.
Benefits of RoDTEP Scheme
- The RoDTEP scheme will help to make Indian exports more competitive in global markets. This is because the scheme will reimburse exporters for the duties and taxes that they have paid on imported inputs.
- The RoDTEP scheme will help to reduce the cost of production for exporters. It reimburses them for the duties and taxes that they have paid on imported inputs.
- The RoDTEP scheme is expected to boost exports from India by making Indian exports more competitive in global markets.
- The RoDTEP scheme is expected to create jobs in India by boosting exports from India.
- The RoDTEP scheme is a simplified and automated scheme. This will make it easier for exporters to avail the benefits of the scheme. This will improve the ease of doing business in India, making it more attractive for foreign investors.
- The RoDTEP scheme will benefit a wide range of exporters. This will help to promote inclusive growth in India.
Eligibility for RoDTEP Scheme
- The RoDTEP scheme is open to all exporters of goods from India. This includes both manufacturer exporters and merchant exporters.
- The RoDTEP scheme covers a wide range of goods exported from India. This includes both manufactured goods and agricultural products.
- The goods must have India as their country of origin. This means that the goods must have been manufactured in India or have undergone substantial transformation in India.
- The goods must be classified under a tariff heading at the 8-digit level. This means that the goods must be classified under a specific category of goods.
- There is no minimum turnover requirement for the RoDTEP scheme. This means that exporters of all sizes can avail of the benefits of the scheme.
RoDTEP Rates
- The RoDTEP scheme offers remission of duties and taxes paid on goods exported from India. This includes central, state, and local levies, as well as embedded taxes.
- The RoDTEP scheme rates are updated on a regular basis. The latest rates can be found on the website of the Directorate General of Foreign Trade (DGFT).
- The rates of remission vary depending on the product and the country of export. Here are some examples of the RoDTEP scheme rates:
- Textiles: 2.4% for exports to the United States
- Chemicals: 1.4% for exports to the European Union
- Machinery: 1.0% for exports to all countries
- Agricultural products: 0.5% for exports to all countries
- The maximum rate of remission under the RoDTEP scheme is 4%. This means that exporters can get a maximum refund of 4% of the value of the goods exported.
MEIS Vs. RoDTEP
| MEIS | RoDTEP |
| 1. Incentives available on the export of goods | 1. Refund of duties and taxes that are currently not being reimbursed by any other schemes. |
| 2. Not compliant with the WTO norms. | 2. Compliant with the WTO norms. |
| 3. 2%-5% of the FOB (Free On Board) value of exports. | 3. Product based % is yet to be notified |
| 4. Issued in the form of physical transferable scrips. | 4. Issued in the form of transferable duty credit or electronic scrips which will be maintained via an electronic ledger. |
Issues Related to RoDTEP Scheme
- Lower Rates: Many exporters expressed disappointment with the scheme due to significantly reduced rates and a limited budget allocation. The rates fail to consider taxes embedded in raw materials, particularly in cases involving engineering products and steel.
- Deprive Large Sectors: Major industries like steel and pharmaceuticals, as well as exports under Advance Authorisation, EOU, SEZ, and others, seem to be excluded from these benefits. This exclusion could negatively impact the competitiveness of Indian exports and foster a sense of dissatisfaction among exporters.
- Freight on Board (FOB): FOB, or Free on Board, determines liability for goods damaged during shipping. “FOB origin” means the buyer assumes responsibility once the seller ships the product. “FOB destination” means the seller remains liable until the goods reach the buyer. These FOB terms impact the buyer’s inventory cost, as taking on liability for shipped goods increases costs and reduces net income.
FAQs
What industries are covered under the RoDTEP Scheme?
The RoDTEP scheme covers employment-oriented sectors like marine, leather, gems and jewellery, agriculture, etc. It will also support other sectors like electrical/electronics, automobiles, machinery, plastics, etc. The RoDTEP and RoSCTL (Rebate of State and Central Taxes and Levies) cover the entire value chain of textiles.
Has the RoDTEP scheme rates been notified?
On 17 August 2021, the Central Government notified the RoDTEP scheme rates and guidelines. The notified rates under the RoDTEP scheme for several sectors include the rates at 0.5%, 1.4%, 2.4% and 4%. However, the government is yet to notify a fixed quantum of rebate per unit for certain export items.