Rodtep Reimbursements: Govt’s Documentation Strategy

The RoDTEP (Remission of Duties and Taxes on Export Products) scheme is a new initiative by the Indian government to boost exports and make them more competitive in the global market. The scheme aims to refund the embedded taxes and duties that were previously non-recoverable by the exporters. The scheme covers all sectors, including textiles, and is applicable from 1 January 2021.

What is RoDTEP?

RoDTEP stands for Remission of Duties and Taxes on Export Products. It is a replacement of the MEIS (Merchandise Exports from India Scheme), which was challenged by the US in the WTO (World Trade Organisation) for violating its norms. The RoDTEP scheme ensures that India stays WTO-compliant and does not provide any export subsidies.

The scheme refunds the embedded central, state and local duties and taxes that are incurred by the exporters in the process of manufacturing and distributing the exported products. These include mandi tax, VAT, coal cess, central excise duty on fuel, etc. The refund is issued in the form of transferable electronic scrips that can be used to pay basic customs duty on imported goods or transferred to other importers.

The scheme is implemented through an automated system of credit and verification, using an IT-based risk management system and an electronic ledger. The scheme covers all sectors, including textiles, and gives priority to labor-intensive sectors that were benefiting from the MEIS scheme. Both manufacturer exporters and merchant exporters are eligible for the scheme.

How to avail RoDTEP benefits?

To avail the benefits of the RoDTEP scheme, exporters need to follow certain steps and documentation requirements. These are:

• Register on the ICEGATE portal (https://www.icegate.gov.in/) and obtain a digital signature certificate (DSC).
• Declare their intention to avail RoDTEP benefits in the shipping bill by ticking the relevant checkbox.
• Provide details of input items used in the exported product along with their tax rates in the ANF 4R form available on the DGFT website (https://www.dgft.gov.in/CP/?opt=RoDTEP).
• Submit the ANF 4R form along with supporting documents such as invoices, bills of entry, GST returns, etc. to the jurisdictional RA (Regional Authority) of DGFT within three months from the date of Let Export Order (LEO).
• Receive the RoDTEP credit in their ledger account with Customs after verification by RA and Customs.
• Utilize the RoDTEP credit to pay basic customs duty on imported goods or transfer it to other importers through ICEGATE.

What are the RoDTEP rates?

The RoDTEP rates are determined by a dedicated committee set up by the government, based on various factors such as product category, sector, export destination, etc. The rates are notified by DGFT from time to time and are subject to change.

The current RoDTEP rates are available on the DGFT website under Appendix 4R (https://www.dgft.gov.in/CP/?opt=RoDTEP). The rates range from 0.5% to 4.3% depending on the product and sector. For example, the RoDTEP rate for cotton yarn is 1%, for leather footwear is 2.5%, for basmati rice is 3%, and for marine products is 4.3%.

The RoDTEP rates are applied on the FOB (Free On Board) value of exports, excluding freight and insurance charges. The maximum RoDTEP benefit per shipping bill is capped at Rs. 10 lakhs.

What are the challenges and opportunities of RoDTEP?

The RoDTEP scheme is a welcome step by the government to enhance India’s export competitiveness and comply with WTO rules. However, it also faces some challenges and opportunities that need to be addressed.

Some of the challenges are:

• The RoDTEP rates are lower than the MEIS rates for some products and sectors, which may affect their profitability and viability.
• The RoDTEP rates are not fixed and may vary depending on various factors, which may create uncertainty and confusion among exporters.
• The RoDTEP scheme is not yet fully operationalized and there are delays in issuing credits and scrips to exporters.
• The RoDTEP scheme requires additional documentation and compliance from exporters, which may increase their cost and time.

Some of the opportunities are:

• The RoDTEP scheme provides a level playing field for Indian exporters vis-a-vis their competitors in other countries who enjoy similar benefits.
• The RoDTEP scheme encourages exporters to use domestic inputs and reduce their dependence on imported inputs, which may improve their quality and value addition.
• The RoDTEP scheme incentivizes exporters to diversify their product portfolio and explore new markets, which may increase their market share and revenue.
• The RoDTEP scheme creates a digital platform for exporters to access and transfer their benefits, which may improve their efficiency and transparency.