At the outset, let me wish you a Happy New Year 2021!!!
On 31st December 2020, a press release has been issued by Government of India launching RoDTEP scheme (Refund of embedded taxes for export product) w.e.f 1st January 2021. The press release says it applies to all export products.
The product wise rates of RODTEP have not yet been announced, however, they will apply retrospectively from 1st January 2021, as and when announced.
The instructions related to information to be included in Shipping bill have also been announced. Hence, any shipping bill filed from 1st January 2021 onwards should include these details and option to claim RoDTEP should be exercised by the exporter by ticking (“YES”). In other words, procedure for claiming RoDTEP is ready.
The amount of RoDTEP will be credited to the ledger account of the exporter directly by customs (similar to credit of All Industry rate of DBK) and therefore there is no need to obtain scrip from DGFT. The RoDTEP scheme therefore will be completely monitored by Customs.
The biggest issue which remains unanswered is what is the rate and whether it is more or less than MEIS scheme? In the year 2018-19 the allocation for MEIS was Rs. 40,000 crores plus and the rates were ranging from 2% to 5% of FOB value on an average. It is therefore essential to see what allocation would be made for this scheme for the calendar year 2021 or FY 2021-22. The allocation will be known when budget is presented on 1st February 2021. Nobody is sure what rate will be announced. Now only this, on how many products (HS codes) the details are submitted by the exporters /export promotion councils / industry associations etc. and what is the calculation arrived at by RoDTEP committee is also not known.
Considering these complexities I have prepared a chart which can indicate the rate and allocation:-
Example:- let us assume, FOB US Dollar 300 Billion and exchange rate is US $ 1= 73 Rs.
*US $ 300 Billion = Rs. 21,90,000 crores Whatever financial constraints Government may be having, we need to understand that, the rates of RoDTEP cannot be high as even for 2% average rate, the required allocation is Rs. 43,800 crores. The fundamental difference is that MEIS is an incentive where as RoDTEP is refund of embedded taxes not otherwise refunded. This being the case, every exporter including EOU units and Advance Authorisation holders are also eligible for RoDTEP. Every export product uses electricity for manufacturing (except handicraft etc) and diesel/petrol for inbound as well as outbound transportation and hence, every product exported is eligible for RoDTEP scheme. The intensions are good, and the scheme is compatible with WTO. The only thing remains is allocation of funds. Let us hope the right allocation is given in coming Budget. Those who are thinking that, the scheme will be true replacement of MEIS (incentive) and expecting a higher rate are going to be disappointed. On the other hand, every product will get the benefit of RoDTEP and not a select class of exporters. Your views are welcome. Sudhakar Kasture Director, EXIM Institute (A Division of Helpline Impex Pvt. Ltd.) Mumbai. E-mail: sk@helplineimpex.co.in
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