No relook at duty remission scheme needed due to US, EU action: Official

“When US investigators come to the manufacturing plants, the exporters should be able to show what they are getting is a remission and not an incentive. They should be able to show that they are paying electricity bills and value-added tax (VAT). But there are problems in maintaining the documents from our exporters side. We are working on a process to familiarize the exporters with the entire documentation process,” the official said.

“There is no need to relook at the scheme. It is WTO compliant. There were few exporters who could not show the documents..some people mentioned it is an incentive because there used to be incentives. So our exporters will have to adapt to the documentation mechanism and the government will be helping in the process,” the official added.

The RoDTEP scheme, announced in January 2021, refunds embedded duties and taxes, such as VAT on fuel used in transportation, mandi tax and duty on electricity. It replaced the WTO-incompatible Merchandise Exports from India Scheme (MEIS) scheme, which had faced several challenges from WTO members.

The RoDTEP scheme operates under a budgetary framework and for FY 23-24, Rs 15,070 crore was allocated to boost exports of items such as pharmaceuticals, organic and inorganic chemicals and articles of iron and steel among other items.

“If our partner country is not able to interpret our policies, then it is a problem. The onus is upon us. Because we are looking for market access. For instance, if partner countries are imposing standards, we have to conform to the standards. So we need market access and so we will have to resolve these issues,” Biswajit Dhar, Professor, Centre for Economic Studies and Planning, Jawaharlal Nehru University, said.

Dhar added that implementation of the scheme assumes significance as other countries are more likely to scrutinize the scheme after the US and EU have imposed countervailing duties on Indian products. He added that RoDTEP is WTO compatible but WTO is about transparency and predictability and the government has to ensure that.

“Another thing is how we are implementing it. There is a problem of oversight. The industry was making a valid point that the rates were too low. In any policy, it has to be constantly reviewed and monitored, to check if compliance is in order. Because for one black sheep, you can’t let the whole scheme be called into question. The government has to be careful about implementation because when our exports are falling, we need to count our pennies. Because we stand to lose,” Dhar added.