The Finance Ministry is ready to consider allowing pharmaceuticals, steel, organic chemicals and inorganic chemicals to benefit from the popular export promotion scheme–Remission of Duties and Taxes on Exported Products (RoDTEP)—but it may not be keen to allocate more resources for it, sources said.
“If the RoDTEP scheme gets extended to the four previously excluded schemes, it is the Commerce Ministry which may be asked to provide the resources from the allocation already made for the scheme. This would be a challenge as the available amount may not be enough to accommodate more claimants but the Finance Ministry has indicated that it would be difficult to come up with more funds,” a source tracking the matter told businessline.
The RoDTEP scheme, announced on January 01, 2021 with the simultaneous withdrawal of the popular Merchandise Export from India Scheme (MEIS), refunds exporters the embedded duties/taxes that are not rebated under other schemes. These include value added tax (VAT) on fuel used in transportation, mandi tax, duty on electricity used during manufacturing, etc.
The MEIS had to be withdrawn as it was not compatible with WTO norms because of lack of transparency in calculation of reimbursement rates.
The RoDTEP scheme, which covers almost 8,000 tariff lines, providing duty remission at rates ranging from 0.3 per cent to 4.3 per cent, excluded some major items such as steel, pharmaceuticals and chemicals.
After months of persuasion by the industry bodies, the government now seems to be ready to include these sectors in the scheme but lack of funds could be a serious impediment.
“The Finance Ministry allocated around ₹13,800 crore this fiscal for RoDTEP scheme. Now, this amount can barely take care of the existing claimants. It will be very difficult to provide for the new sectors from this fund. The Finance Ministry has to allocate more funds or the Commerce Ministry can explore if it is possible to channelise funds from some other scheme,” the source said.
With India’s exports taking a severe beating in October 2022, falling around 16.5 per cent (year-on-year), and world trade expected to grow by just 1 per cent next year, the Centre is looking at ways to provide support.
Exporters are hoping that the government will sort out the issue of funding and extend the RoDTEP scheme soon, the source said.