RoDTEP is an abbreviation for Duties and Taxes on Export Products. It is an exporter-benefit scheme that came into effect on January 1st, 2021. RoDTEP came as a replacement for an erstwhile scheme called MEIS (Merchandise Exports from India Scheme). This scheme ensures that the Indian exporters receive refunds against the paid taxes and duties. The scheme aims at boosting export by facilitating incentives to the concerned exporters.
An Overview RoDTEP Scheme
The United States has criticized Indian-based export schemes in the WTO. The US claimed that these schemes are against the interest of American workers. The WTO dispute panel ruled out the judgement against India, claiming that the export subsidy schemes were seemingly breaching the trade body’s norms. The panel further stated that the export subsidy schemes could not remain in effect. This led the Government to introduce a new WTO-compliant scheme, i.e. RoDTEP.
The following are the former export subsidy schemes that were proposed to be withdrawn:
- Merchandise Exports from India Scheme
- Electronics Hardware Technology Parks Scheme
- Export Oriented Units Scheme
- Export Promotion Capital Goods Scheme
- Bio-Technology Parks Scheme
- Duty-Free Imports for Exporters Scheme
- Special Economic Zones (SEZ) Scheme
Salient Features of the RoDTEP Scheme
Refund of the erstwhile non-refundable taxes and duties
VAT, Coal cess, Mandi tax, Central Excise duty on fuel etc., shall be eligible for a refund under this scheme. All the products under MEIS and the RoSTCL are now under the RoDTEP Scheme’s purview.
The automated system of credit
The refund will be initiated in the form of electronic scrips. These duty credits shall be managed and probed via an electronic ledger.
Prompt verification via digitization
Through the advent of the digital landscape, clearance related activities happen promptly. Checking of the exporters’ records shall be done via an IT-based risk management system to speed up the transaction processing.
RoDTEP seeks to ensure uniformity across all areas that fall under its ambit.
In addition to that, a dedicated committee will come to effect to decide the phase-wise implementation of the scheme across the key sectors. The committee will also be liable for formulating the benefits provided to the respective industry.
Eligibility to obtain benefits of the RoDTEP Scheme
- All sectors falling under RoDTEP Scheme shall have access to underlying benefits. Further, the scheme intends to give priority to Labor-intensive sectors.
- Manufacturer exporters and merchant exporters (traders) also have access to the scheme’s benefits.
- RoDTEP scheme has no criteria relating to the turnover threshold. This would help small exporters a great deal.
- Products that Re-exported would stand ineligible to access the scheme.
- Every exported product should have a country of origin, i.e. COI as Indian, to avail the scheme’s benefits.
- Export Oriented Units and Special Economic Zone Units can access the scheme’s benefits.
- RoDTEP scheme is also accessible to goods shipped via courier through e-commerce platforms.
Availing benefits under RoDTEP Scheme
The ICEGATE portal (aka Indian Customs Electronic Gateway) shall entail the information relating to credit availed by the exporter. At the port, the exporter should disclose the shipping bill, the details pertaining to the claim of the RoDTEP benefit relating to the given item of export and generate credit scrip for it.
These scrips will then be utilized to address custom duties and claim rebates. Further, scrips can be sold out to any third party as they are transferrable in nature.
The process of generating and claiming scrips as per the RoDTEP scheme is shown below.
- The exporter should file a claim declaration for RoDTEP in the shipping bill.
- Upon filing the Export General Manifest (EGM), the Customs initiate the processing of the claim.
- Post-processing, a scroll with all Shipping Bills for the mentioned amount shall be generated and then shared on the user’s account at the ICEGATE portal.
- The exporter must log in to the said portal and create a credit ledger account.
- Next, the exporter can log into the portal and generate scrips via choosing the relevant shipping bills.
- Next, the refund shall be credited to the exporter account for specific utilization purposes.
Government is yet to introduce the rate of duty of remission for the products falling under the RoDTEP scheme
Major Differences between MEIS and RoDTEP
|1. Incentives available on the exportation of goods||1. Refund of duties & taxes that are presently not being reimbursed by any other schemes.|
|2. It is not WTO-compliant||2. It is a WTO-compliant|
|3. 2%-5% of the FOB value of exports.||3. GOI is yet to roll out product based percentage|
|4. MEIS was shared to applicant in the form of physical transferable scrips.||4. Issued in the form of transferable duty credit or electronic scrips which shall be administered via an electronic ledger.|
Key points to ponder
- On August 17th 2021, the GOI rolled out the RoDTEP scheme rates & guidelines. The notified rates under the said scheme for various sectors include 0.5%, 1.4%, 2.4% and 4%. However, the Government is still deciding on releasing a fixed quantum of rebate per unit for given exportable products.
- 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.
- The RoDTEP scheme encompasses sectors like leather, marine, agriculture, gems and jewellery, etc. It will also bolster sectors like automobiles, plastics, machinery, electrical/electronic, etc.
- Some of the key sectors presently exclude from the schemes include steel, pharmaceuticals, organic and inorganic chemicals, etc.
- The common documents required for RoDTEP Scheme include Shipping bills, DSC – Class 3, Electronic Bank Realisation Certificate* eBRC), and RCMC Certificate.
- The GOI released the RoDTEP scheme on January 1st 2020. The RoDTEP scheme shall remain in effect till 2025. The scheme seeks to subsidize the entire merchandise exports of India.
Electronic Bank Realisation Certificate*: An eBRC (electronic Bank Realisation Certificate) refers to a digital certificate for those engaged with the export business. It is granted by the designated bank as confirmation that the concerned exporter has received payment against the exports of goods or services.
Registration Cum Membership Certificate*:
As per the Foreign Trade Policy, a RCMC is required to avail benefits under the policy. The certificate mainly benefits the exporters and helps reduce immediate liabilities relating to shipping.
The RoDTEP scheme came as a replacement for the previous scheme known as the Merchandise Exports from India Scheme. It was released because the previous scheme did not comply with WTO’s norms. This scheme seeks to facilitate incentives to the small exporters in the form of duty scrips.