The Merchandise Exports from India Scheme (MEIS) for specified goods and Service Exports from India Scheme (SEIS) for exports of notified services were introduced under Foreign Trade Policy (FTP) 2015-20. MEIS incentivizes exporters at the rate 2, 3 and 5 % of realized FOB value of exports while SEIS offers at 3% or 5% of net foreign exchange earned by a service exporter.
During the mid-term review of FTP these rates were increased by an additional 2% for about 2250 labor intensive/MSME items as well as 2% for all service categories. As on 31st December, 2020 (sunset date for MEIS), eligible HS lines under MEIS were over 7400. The value of scrips issued under MEIS Scheme for years 2018-19, 2019-20 and April-October, 2020 was Rs 39,298 crores, Rs 39,046 crores and Rs 13,340 crores while under SEIS Scheme was Rs 4,263 crores, Rs 7,114 crores and Rs 3,288
RoDTEP Scheme is primarily a replacement of MEIS Scheme which was challenged by the US at WTO wherein a dispute panel in the WTO ruled against India. It stated that the export subsidy programmes that were provided by the Government of India distorted trade by providing direct subsidies and these subsidies were found to be inconsistent with Articles 3.1(a) and 3.2 of the SCM Agreement. It is worth noting that under Article 3.1 of the WTO’s SCM agreement, all developing countries with gross per per capita of $1,000 per annum for three consecutive years are required to stop all export incentives and this threshold limit was crossed by India.
Ministry of Commerce & Industry has on August 17, 2021 notified RoDTEP Scheme w.e.f. 1st January, 2021. Under the RoDTEP, various Central and State duties, taxes, and levies imposed on input products like taxes such as duty on power charges, VAT on fuel in transportation, farm sector, captive power generation, mandi tax, stamp duty and central excise duty on fuel used in transportation, among others, would be refunded to exporters, as a %age of F.O.B. value of exports. This would be done in the form of e-scrips that can be used for payment of Basic Customs Duty.
The tax refund rates range from 0.5% to 4.3% for various sectors. The rebate allowed is subject to the receipt of sale proceeds within time allowed under the FEMA, 1999. The RoDTEP coupled with GST refund and Duty Drawback ensure that products exported do not contain any incidence of taxes and duties. The rates of RoDTEP will cover 8555 tariff lines. For the RoDTEP scheme, as per Commerce Secretary B.V.R. Subrahmanyam, the amount is Rs12,454 crore and the remaining Rs6,946 crore for RoSCTL would be available for FY 2021-22.
The scheme is available for all the exports/exporters, however, the if the exports is of specified imported goods, exports is through transshipment, products which are subject to minimum export price or export duty, restricted/prohibited, deemed exports, exports from non-EDI ports, etc. shall not be eligible for rebate under RoDTEP Scheme.
Besides, if the supplies of products manufactured by DTA units to SEZ/FTWZ units, manufactured in EHTP, BTP, partly or wholly in a warehouse under section 65 of the Customs Act, 1962, are also ineligible for the RoDTEP Scheme. Furthermore, it is worthwhile to note that where the products manufactured or exported in discharge of export obligation against an AA or DFIA or SAA issued under a duty exemption scheme of relevant FTP, products manufactured or exported by a unit licensed as hundred 100% EOU and products manufactured or exported by any of the units situated in FTZ or EPZ or SEZ, are also currently under the ineligible list, however, RoDTEP Scheme will be applicable but from a later date based on the recommendations of the RoDTEP Committee.
The scheme excludes certain sectors like iron & steel, articles of iron & steel, chemicals and pharmaceuticals which are doing well without incentives but at the same time includes few new products. At the time when the RoDTEP Scheme was announced, the excluded categories were clearly mentioned in the instructions and these products were not included in the excluded categories, therefore, it is a challenge for those exporters who have made exports considering the notional RoDTEP rates.
It is worthwhile to observe that since the RoDTEP Scheme is a WTO Compliant and is also a flagship scheme of the Department of Commerce, therefore, things have been kept flexible as there is provision for review the RoDTEP rates on an annual basis which will be notified well in advance before the beginning of a financial year. However, it needs to be noted that one of the key drivers is the overall budget/outlay for the RoDTEP Scheme that would be finalized by the Ministry of Finance in consultation with the Department of Commerce (DoC), taking into account all relevant factors.
Source : Economic Times