The RoDTEP scheme, announced in January 2021, refunds embedded duties and taxes, such as VAT on fuel used in transportation, mandi tax and duty on electricity. It replaced the WTO-incompatible Merchandise Exports from India Scheme (MEIS) scheme, which had faced several challenges from WTO members.
The federal government has no plans to reconsider its Remission of Duties and Taxes on Exported Products (RoDTEP) scheme in light of countervailing duties imposed by the United States (US) and the European Union (EU) last year. The US and EU imposed countervailing duties (CVDs) on four Indian products, alleging a breach of World Trade Organization (WTO) norms following an anti-subsidy investigation into paper file folders, common alloy aluminum sheet, and forged steel fluid. CVDs are tariffs imposed on imported goods to offset subsidies provided by the exporting country’s government, aimed at safeguarding the domestic industry.
According to a government official, when US investigators visit manufacturing plants, exporters must demonstrate that they are receiving remissions rather than incentives. Challenges arise from maintaining proper documentation on the exporters’ side. The official stated, “We are working on a process to familiarize exporters with the entire documentation process. There’s no need to reconsider the scheme; it is WTO compliant. Some exporters faced issues presenting documents, but we are assisting them in adapting to the documentation mechanism.”
The Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, designed to replace the WTO-incompatible Merchandise Exports from India Scheme (MEIS), addresses various taxes, including VAT on fuel used in transportation, mandi tax, and electricity duty. It operates within a budgetary framework, with Rs 15,070 crore allocated for FY 23-24 to boost exports of items like pharmaceuticals, organic and inorganic chemicals, and articles of iron and steel.
“If our partner country struggles to interpret our policies, it becomes our problem as we seek market access. Resolving issues is crucial, especially when facing standards imposed by partner countries. Market access is vital, and we must address these challenges,” said Biswajit Dhar, Professor at the Centre for Economic Studies and Planning, Jawaharlal Nehru University.
Dhar emphasized the importance of proper implementation, given increased scrutiny of the RoDTEP scheme after the imposition of countervailing duties by the US and EU. While asserting RoDTEP’s WTO compatibility, he highlighted the need for transparency and predictability in government actions. Dhar urged constant review and monitoring of the scheme, acknowledging industry concerns about low rates. He emphasized the government’s responsibility in ensuring compliance and careful implementation, especially during a period of declining exports.
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