Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme

The Government of India has recently extended the RoDTEP (Remission of Duties and Taxes on Exported Products) incentive scheme for exporters until March 31, 2026. This extension aims to support Indian exporters by compensating for taxes and duties that are embedded in exported goods but are not refunded under any other mechanism.

About RoDTEP Scheme

• Introduction: The RoDTEP scheme was introduced as an amendment to the Foreign Trade Policy 2015-20 and became effective for exports starting January 1, 2021.

• Primary Objective: The scheme’s primary goal is to offset taxes and duties incurred on exported goods, which are not eligible for reimbursement under other schemes. This ensures that the costs associated with exporting goods are reduced, making Indian products more competitive in global markets.

• Global Compliance: The RoDTEP scheme is designed to be compliant with World Trade Organization (WTO) norms, ensuring that it doesn't violate global trade rules.

• Implementation: The scheme is implemented via a digital platform for end-to-end transparency and efficiency. Exporters can claim remissions through this platform, ensuring a smooth and quick process.

• Replacement of MEIS: RoDTEP replaced the Merchandise Export Incentive Scheme (MEIS), which was challenged by the United States at the WTO due to concerns about subsidy compliance.

Tax Reimbursement Under RoDTEP Scheme

The scheme reimburses exporters for embedded duties, taxes, and levies incurred during the production and distribution of exported products. These include:

1. Indirect taxes: Taxes applied at prior stages of manufacturing and distribution.

2. Direct taxes: Taxes that are not refunded under any existing mechanism at the central, state, or local levels.

The remittance is provided as a percentage of the freight on board (FOB) value of exports, ensuring that exporters get reimbursed based on the value of their exports.

Eligibility Criteria for the RoDTEP Scheme

• Sectors Covered: The scheme applies to all sectors, with labor-intensive sectors given priority to encourage employment.

• Eligible Exporters:

  • Both manufacturer exporters and merchant exporters (traders) are eligible.

  • Special Economic Zone (SEZ) and Export-Oriented Units (EOUs) are also eligible.

  • No turnover threshold is required for eligibility under the scheme.

• Goods Criteria:

  • The goods exported must have India as their country of origin.

  • Re-exported products are not eligible for the benefits under this scheme.

  • Exports made via courier or e-commerce platforms are also covered under RoDTEP.

Refund Process and Mechanism

• Remission in the Form of e-Scrips:

  • The rebate is issued as transferable e-scrips, which are maintained in an electronic credit ledger managed by the Central Board of Indirect Taxes and Customs (CBIC).

  • These e-scrips hold monetary value and can be used to pay basic customs duties on imported goods.

  • They are also transferable to other importers, providing flexibility to exporters.

• Digital Platform for Speedy Clearance:

  • The scheme is facilitated through an IT-based platform that ensures faster clearance and remissions.

  • An audit and monitoring mechanism ensures compliance and verifies the records of exporters through a risk management system.

Significance of the RoDTEP Scheme

1. Boost to Exporters: By providing a rebate on embedded taxes, the RoDTEP scheme reduces the overall cost burden on exporters, enhancing the competitiveness of Indian products in the global market.

2. WTO Compliance: The scheme is designed to adhere to WTO norms, ensuring that India’s export incentives are aligned with global trade standards and avoiding trade disputes.

3. Increased Export Potential: With its focus on all sectors, especially labor-intensive industries, the scheme aims to boost export growth and employment opportunities, making Indian exports more attractive globally.

4. Simplified Process: The digitalization of the refund process ensures transparency, speed, and efficiency, reducing administrative burdens and delays for exporters.

Conclusion

The extension of the RoDTEP scheme until March 31, 2026 reinforces the government’s commitment to supporting India’s export sector. By offering tax reimbursements on embedded duties and taxes, the scheme boosts India's export competitiveness and ensures the country remains a key player in the global trade arena.