Exporters welcome RoDTEP rate announcement, Pawan Goenka says not possible to raise exports where it is not cost competitive

More than eight months after the remission of duties and taxes on exported products scheme or RoDTEP was notified, the government has finally announced rates under the scheme.

Depending on the freight on board value of exports, the rates range from 0.5 to 4.3 percent and will cover over 8,500 tariff lines. The objective of the scheme is to refund duties, taxes or levies at the central, state and local level that are borne on the exported product. So, RoDTEP combined with the rebate of state and central taxes and levies will have a budget outlay of Rs 19,400 crore. This also includes a scheme for the textile sector.

The rate notification comes after exporters had voiced concerns over the long delay and had also approached the finance minister Nirmala Sitharaman, commerce minister Piyush Goyal as well as the Prime Minister's Office seeking clearance of dues under the Merchandise Exports from India Scheme (MEIS) and to seek clarity on RoDTEP rates.

Pawan Goenka, Chairman of SCALE Committee, said, “The industry has been looking for this clarity for a long time and there have been several representations made at various levels for announcing the rates as quickly as possible. Therefore, the industry is happy that the scheme has been announced finally, but I would think that many of the sectors would perhaps be a little bit disappointed with the rates. Though, the government couldn't have done anything because this is simply refund of the taxes and duties that are not being credited and therefore the rates were bound to be lower in many cases than the MEIS scheme.”

A Sakthivel, President, FIEO, said, “It is a welcome (move) because after eight months we are going to get this RoDTEP rates because it will definitely help us in our cash flow. Our request is that they have said advance licensing of 100 percent export-oriented unit (EOU) under SEZ will be included by the committee. So we request the government it should be done immediately so that those sector also will get the benefit.”

“Also I find that pharma, organic, inorganic iron and steel and also iron and steel articles are left out. So these are also very important sectors so we request the government to please consider this sector also.”

On the sectors, which are left out, Goenka said, “I am not aware of which sectors have been included or excluded and what the rates are, because I have not gone through those 300 pages. But clearly any sector that is left out or any sector where the rate is lower than MEIS rates would feel a bit of a pinch in terms of the export competitiveness. As we know very well that cost plays a very important role in what we can export from our country and wherever we are not cost competitive, it is not possible to really increase export.”

“At the same time, I think the government really had to go through the calculation of what are the taxes and duties that are not credited or that are not set off already in the GST and therefore I don't think the government had too much flexibility of what the rate can be. So what I would like to therefore, add is that wherever there is a reduction in promotion incentive from MEIS to RoDTEP we will have to make it up somehow by reducing the cost and that is what we will need to focus on. It won't happen overnight, but we need to focus on how do we make our merchandise less expensive and more complicated for export.”