TAG: GS 3: ECONOMY
THE CONTEXT: The Indian government, under the leadership of Commerce and Industry Minister, has announced a significant expansion of the Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme.
EXPLANATION:
- This development aims to provide tax refunds to outbound shipments from Special Economic Zones (SEZs), Export Oriented Units (EOUs), and entities utilizing the Advance Authorisation (AA) scheme.
- The move is poised to benefit key sectors like Engineering, Textiles, Chemicals, Pharmaceuticals, and Food Processing.
RoDTEP to SEZs and EOUs:
- Scope of Eligibility:
- SEZs and EOUs, representing a substantial quarter of India’s exports, will now be included in the RoDTEP Scheme.
- Exporters utilizing the Advance Authorisation (AA) scheme for duty-free import of inputs incorporated into export products will also benefit from RoDTEP.
- Implementation Timeline:
- The benefits for EOUs and AA holders will commence from March 11, 2024.
- However, SEZs will have to await integration with the automated ICEGATE system of the Customs section for their IT systems.
- The benefits for SEZs are expected to be operational until September 30, 2024.
- Budgetary Allocations and Validity:
- To align with budgetary considerations, the RoDTEP benefits for SEZs, EOUs, and AA holders are currently valid until September 30.
- The RoDTEP Scheme, initiated in January 2021 to replace an earlier export incentive scheme, has a budget of ₹15,070 crore for 2024-25 and has already provided support worth ₹42,000 crore.
Significance and Industry Impact:
- Recognition of Contribution:
- The decision acknowledges the substantial contribution of SEZs, EOUs, and AA holders, collectively constituting about 25% of India’s total exports.
- Amid global economic uncertainties and supply chain disruptions, the extension of RoDTEP aims to assist these sectors in navigating international challenges.
- Targeted Sectors:
- Key sectors such as Engineering, Textiles, Chemicals, Pharmaceuticals, and Food Processing are expected to reap the benefits of the extended RoDTEP Scheme.
- The move aligns with the government’s commitment to supporting industries crucial for economic growth.
Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme:
- It was introduced by the Government as a duty remission scheme on exports and is being implemented from 1st January 2021.
- It was enforced to repeal and reduce taxes for exported products, thereby encouraging the conditions of exported and increasing the amount of exports in the country.
- The scheme will be administered by the Department of Revenue, Ministry of Finance.
- It is a WTO-compliant scheme and follows the global principle that taxes/duties should not be exported.
- RoDTEP replaced the Merchandise Export Incentive Schemes (MIES), in response to the US challenging the Indian export subsidies under the MEIS at the WTO.
- When the WTO dispute panel ruled against India, RoDTEP was framed to ensure that India remains WTO-compliant, while also supporting low-volume exports of commodities from India.