GoI extends export benefits under the RoDTEP Scheme to SEZ units

News Excerpt:

Recently, the Government of India notified an extension of Remission of Duties and Taxes on Exported Products (RoDTEP) support to Advance Authorisation Holders, Export Oriented Units and Special Economic Zones Units.

  • This decision comes in recognition of these sectors' significant contribution to India's exports, constituting about 25 per cent of the total shipment.

About RoDTEP Scheme:

  • The Remission of Duties and Taxes on Exported Products (RoDTEP) scheme is a Department of Commerce scheme that was implemented for exports. 
  • RoDTEP is a WTO-compliant scheme and follows the global principle that taxes/duties should not be exported. It replaced the Merchandise Exports from India Scheme (MEIS), in response to the US challenging the Indian export subsidies 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.
  • The RoDTEP scheme is implemented by the Department of Revenue (DoR) with the issuance of remission amount in the form of transferable duty credit electronic scrip, which is maintained in an electronic ledger in the Customs system.
  • Duty credit allowed under the RoDTEP scheme is subject to the realisation of sale proceeds within the period prescribed by RBI. 
  • The current RoDTEP rates range from 0.3 per cent to 4.3 per cent.
  • Since its inception in 2021, the scheme has already provided support of Rs 42,000 crore to more than 10,500 export items.
  • In the current financial year, the scheme has a budget of Rs 15,070 crore, with an additional increase of 10 per cent in 2024-25.

Significance of the extension of the RoDTEP Scheme:

  • The extension is aimed at enhancing India's export competitiveness in international markets.
  • Key sectors, such as engineering, textiles, chemicals, pharmaceuticals and food processing, stand to benefit from the measure.
  • The primary goal of RoDTEP is to refund taxes and duties that are not rebated under any other scheme. 
    • This includes various central, state, and local duties/taxes/ levies incurred in the manufacturing and distributing of exported products but not refunded through schemes like GST (Goods and Services Tax) or Duty Drawback scheme.
  • By supporting crucial export sectors, the government strives to create employment opportunities and contribute to overall economic growth, aligning with the vision of building an Aatmanirbhar Bharat.

Duty Drawback scheme:

  • The Duty Drawback Scheme (DBK) is a key programme to help exporters offset some of the costs accrued during the export process, particularly in the supply or value chain. 
  • The key benefit of the scheme is that it gives rebates on Customs and Central Excise chargeable on any imported or excisable materials used to manufacture goods meant for export.
  • The scheme, administered by the Department of Revenue, has two primary components: (a) All Industry Rate (AIR) and (b) Brand Rate. 
    • One way to grant the duty drawback is to check the rates specified in the Schedule of All Industry Rate of Drawback, usually announced on June 1 or three months after the budget. 
    • If the product is not mentioned in the AIR schedule or the exporter claims it is inadequate, the exporter can claim duty drawback by applying for Brand Rate fixation.

Advance Authorisation Holders:

  • Advance Authorisation Scheme allows duty-free import of inputs, which are physically integrated into the export product. 
  • Its provisions extend to fuel, oil, packaging material, and catalyst consumed/utilised in the production process of the export product.
  • Advance Authorization can be availed by manufacturer exporters or merchant exporters who are linked with supporting manufacturers for physical exports (including exports to SEZ), intermediate supplies, and supply of ‘stores’ on board foreign going vessels/aircraft (conditions apply).
  • Apart from that, Advance Authorization is issued to subcontractors to any project (where the name of the sub-contractors appears in the main contract), United Nations Organizations (UNO), aid programs of the United Nations or other multilateral agencies, the likes of which are paid for in free foreign exchange.
  • Advance Authorization for importing raw sugar can be issued to either a manufacturer exporter or merchant exporter associated with supporting manufacturers.

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