RoDTEP scheme: Bajaj Auto says rates fair compensation for two-wheelers

More than eight months after the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme was notified, the government has finally announced the rates. Depending on the freight on board (FOB) value of exports, the rates range from 0.5 to 4.3 percent and will cover 8,555 tariff lines. The objective of the scheme is to refund duties, taxes at the central, state and local level that are levied on the exported product.

Auto companies are in focus after the government notified the rates for the said RoDTEP scheme. The rates stand at 1-1.5 percent lower than the earlier MEIS export benefit of 2 percent. CNBC-TV18 spoke to Rakesh Sharma, ED, Bajaj Auto, to know what this really means for the auto sector, especially for two-wheeler makers.

Sharma said, “The rates for the two wheelers is between 1.2 to 1.4 percent depending on the engine displacement and for three wheelers, the rate is 1.4 percent. From a two-wheeler perspective, as we understand at Bajaj Auto, this is a fair compensation for the taxes, duties and levies, which we have to pay domestically.”

“When we look at the purpose behind RoDTEP and why it has been put in place, at least from a two-wheeler point of view, it is a fair compensation. Though I do understand from my colleagues at the Society of Indian Automobile Manufacturers (SIAM) that for four wheelers and other vehicle segments, there is probably a little bit of a shortfall,” said Sharma.

On comparison with MEIS, he said, “In my own view, MEIS was different in its spirit and purpose -- it was to boost exports and was an incentive to overcome infrastructural inefficiencies and things like that, so was a blanket thing, but it was not WTO compliant. As we all know, RoDTEP is not a strict replacement for that. RoDTEP is really to compensate for things like toll, tax or surcharge on electricity and water and stuff like that. So, it's not really comparable.”

On logistic issues and exports, Sharma said, “Exports are steady, there are still some logistic issues. I would say that ASEAN side is still reeling under the pandemic, and it's not yet come back to normalcy. That is why you are seeing this semiconductor shortage, because there is a lot of manufacturing, which takes place in places like Taiwan, Malaysia, etc. But from our market point of view, yes, Philippines is a very important market for us and some emerging markets like Malaysia, Thailand, where we have demand, which has got impaired. But keeping that aside, I would say with Asia, largely Africa, Latin America, all are sort of back and demand is steady. There is a little bit of worry about the currencies in key markets in Africa, but no alarm as yet, so it's looking good in those geographic regions.”

When asked if the company would book the export benefits in Q2 itself, he said, “I will leave that to our CFO to decide but we have not booked this benefit from January 1 and do not know exactly how and when we will book it. It has accrued to us, because the government has announced it and till now, we have not booked it, but how exactly the treatment will be done, I think, the CFO will take a call on that.”

Sharma further mentioned, “With the RoDTEP getting finalised and if the PLI comes in, it will be a very big boost to companies which have got global ambitions, companies which are investing in R&D, companies which are manufacturing and generating employment, it would be a really good boost.”