What Is the RoDTEP Scheme, Its Benefits and Eligibility ?

The Indian government has devised many schemes to aid exporters. Some are guarantees like Export Promotion Capital Goods (EPCG) Scheme, and others offer rebates and refunds. Take the RoSCTL, a rebate on state and central taxes for exporters. RoDTEP (Remission of Duties and Taxes on Exported Products) is another initiative by the Indian Government.

• Also Read: What is RoSCTL Scheme?

RoDTEP scheme is a relatively recent scheme launched in January 2021. This scheme aims to make Indian exporters competitive by refunding levies and taxes not covered under other schemes. It replaces a scheme like MEIS, which did not comply with the World Trade Organization rules.

What are the main features of the RoDTEP scheme?

As an exporter, it is vital to understand what RoDTEP scheme represents and how it can benefit your business:

• The scheme encompasses all the goods that are exported and the sectors involved in the export process from India
• As per the scheme, it focuses on providing rebates for taxes that were not remitted earlier. These include central, state, and local duties on transportation, fuel, and electricity. It also includes toll taxes, Mandi taxes, and stamp duties as well as the embedded taxes on inputs in the production of export goods
• The rebate will be given to exporters in the form duty credit scrips that they can use to pay custom duties, transfer, or traded in the market
• This scheme complies with WTO regulations and is based on taxes paid rather than fixed subsidies like earlier schemes
• The rate of rebate will vary depending on the product and is based on the taxes that are unremitted for each item
• Exporters need to keep looking out for notifications and updates provided periodically by the government

What is the impact of RoDTEP on the export sector?

Helps Indian exporters become more competitive

Since the scheme aims to offset taxes that were unremitted previously, it helps lower the cost of producing and exporting goods. This, in turn, helps exporters offer their products at a more competitive price without compromising on quality standards. This establishes them at par with the other competitors in the global market.

Builds and maintains an even standard

With this scheme, exporters can level their standards of production, operation, and overall quality with that of their international competitors who enjoy similar subsidies. It ensures that our exporters are able to meet the stringent quality standards that are expected of them in different markets.

Helps expand the country’s export scope

Exports play an essential part in a country’s economy, boost entrepreneurship, and increase employment across all related sectors. With schemes like RoDTEP, the country’s scope of exports expands to include technical and indigenous products that have a great demand across the globe. It encourages small and medium-sized businesses to start offering local products to the international market.

Is transparent to use and compliant with WTO

With digitalization of the scheme, the entire process becomes easier and more transparent, preventing misuse or frauds. The faster processing times encourage exporters to become more involved in developing their business. Moreover, the scheme aligns with WTO norms reducing the risk of trade-related disputes.

What are the concerns and challenges with the RoDTEP scheme?

• Exporters feel that the rebate rates in some sectors does not cover the taxes they pay and this limits the effectiveness of the scheme
• There have been some delays in the finalization and implementation of the scheme causing delays in refunds resulting liquidity issues for exporters
• The allocated budget for this purpose by the government is limited and may not completely cover the exporters’ needs

In conclusion, schemes like RoDTEP can help exporters reduce their cost burden to a certain extent and offer them a chance to be more competitive in their pricing. However, any scheme the government offers needs the exporters to be smart in managing all aspects of the business like documentation, inward remittance, and trade finance. This is where LeRemitt steps in to fill the gap by providing solutions that are secure, transparent, and efficient. Want to learn how we help? Click here to learn how!