How can  the new rebate scheme help exporters? (On RoDTEP scheme)

What is the news?

Recently, the Commerce Ministry released details of new scheme RoDTEP scheme to help exporters to stay competitive and increase exports at a time when there is an increase in demand from developed economies.

Background

• Read here: Govt notifies RoDTEP rates, guidelines

How does the new scheme work?

• The refund for the taxes paid by exporters under the scheme will be credited to an exporter’s ledger account held with customs.
• This refunded amount can be used by exporters to pay basic custom duties on imported goods.
• These credits can also be transferred to other importers.
• A monitoring and audit mechanism has been put in place to physically verify the records.

Opinion of the exporters

• Issues with low rates– Exporters are unsatisfied on the amount of relief offered and argue that the low rates under the scheme will have little benefits.
• Issues with exemption– Exporters in sector like engineering and electronics, which use iron and steel as inputs, are unhappy because they are unable to claim the benefits for their inputs since iron and steel has been exempted from the scheme.