The Remission of Duties and Taxes on Export Products (RoDTEP) scheme is a significant initiative introduced by the Indian government to enhance the competitiveness of Indian exporters in the global market.
Launched in 2021, RoDTEP aims to refund various taxes and duties levied at the central, state, and local levels, which were not being reimbursed adequately under the previous schemes like Merchandise Exports from India Scheme (MEIS).
Understanding the intricacies of RoDTEP, including its benefits, requirements, guidelines, and RoDTEP rates, is crucial for traders and exporters seeking to leverage this scheme effectively.
What is RoDTEP?
RoDTEP's full form is Remission of Duties and Taxes on Export Products. It is a recent initiative by the Indian Government. Introduced as part of the Foreign Trade Policy 2015-20 amendment, it took effect on January 1, 2021. The main goal of this scheme is to offset the taxes and duties incurred on exported goods that wouldn't otherwise be reimbursed and are included in the exported goods.
Under this scheme, exporters receive a refund for all concealed central, state, and local duties, taxes, and levies associated with the exported goods, which haven't been reimbursed through any existing program. This includes the exporter's direct expenses and the indirect taxes on goods incurred in earlier stages.
Key features of the RoDTEP scheme are
- The scheme encompasses taxes and duties previously unreimbursed at central, state, and local levels. It now includes items previously under MEIS and RoSCTL.
- Exporters receive refunds as transferable duty credit or electronic scrips managed in an electronic ledger. These credits can be utilised for essential customs duty payments on imports or transferred to other importers.
- Clearance processes are expedited through a digital platform, supported by monitoring, audit mechanisms, and IT-based risk management for physical verification of exporters' records.
- The scheme extends across all sectors, ensuring equitable benefits across various industries.
Benefits of the RoDTEP scheme
The core benefits of the RoDTEP scheme lie in its support for Indian exports, ensuring fair competition for local producers compared to other countries. This scheme reduces exporter costs, increases exports, and supports the Make in India initiative. Here are some more benefits of the RoDTEP scheme for exporters:
Boosting export competitiveness:
RoDTEP aims to refund various taxes and duties incurred during the export process, thereby reducing the cost of exported products. This helps make Indian products more competitive in the international market.
Simplification of export procedures:
By providing a single-window mechanism for the refund of duties and taxes, RoDTEP simplifies export procedures, making it easier for exporters to claim benefits and reducing administrative burden.
Enhancing exporters' cash flow:
Exporters often face cash flow constraints due to the blockage of funds in the form of duties and taxes paid on inputs. RoDTEP refunds these amounts, thereby improving exporters' cash flow and liquidity.
Encouraging value addition and manufacturing:
RoDTEP encourages exporters to add value to their products and engage in domestic manufacturing activities by providing incentives for both direct and indirect exports.
Addressing competitiveness challenges:
The scheme addresses the challenge of export competitiveness faced by Indian exporters due to high indirect taxes and levies embedded in exported products.
Compliance with WTO guidelines:
RoDTEP is designed to be compliant with World Trade Organization (WTO) guidelines, ensuring that export incentives are consistent with international trade regulations.
Promoting diversification of export markets:
By reducing the cost of exports, RoDTEP encourages exporters to explore and diversify into new markets, reducing dependence on traditional markets and enhancing resilience in the face of global economic uncertainties.
Requirements of the RoDTEP scheme
To avail of the benefits of the RoDTEP scheme, you must meet certain eligibility requirements:
- All industrial sectors in India can benefit from RoDTEP, with priority given to labour-intensive sectors already enjoying MEIS benefits.
- There is no minimum turnover requirement for eligibility.
- The scheme excludes re-exported products.
- Products must be manufactured in India to qualify.
- Special economic zones (SEZ) and export-oriented units (EO) are eligible.
- E-commerce platforms exporting Indian-made products via courier services can also benefit without additional requirements.
Documents required for RoDTEP Scheme
The exporter needs to provide the following documents to access the benefits of the RoDTEP scheme:
- Shipping bills
- Electronic Bank Realization Certificate (e-BRC)
- Class 3 individual Digital Signature Certificate (DSC)
- Registration-Cum-Membership Certificate (RCMC)
How to apply for a RoDTEP scheme?
To apply for the RoDTEP scheme, follow the steps below content in
Step 1: Set up a RoDTEP credit ledger account on the ICEGATE website using a Class 3 individual-type Digital Signature Certificate (DSC).
Step 2: In your shipping bill, you must declare your intention to claim RoDTEP benefits for the exported items.
Step 3: Declare the necessary information for each item in the shipping bill's SW_INFO_TYPE table.
Step 4: Your shipping bills undergo assessment in the scheme's Risk Management System (RMS).
Step 5: Processed bills move to 'scroll' queues.
Step 6: Once the scroll is generated, credits are available in the ICEGATE account for claiming and conversion into credit scrips.
Final thoughts
The RoDTEP scheme aims to boost India's exports by providing a WTO-compliant system to reimburse taxes and duties that were previously non-refunded. It seeks to provide exporters a level playing field in the international market.
The coverage is broad, with incentives for MSMEs, labour-intensive, and service sectors. The current RoDTEP scheme is between 0.3% and 4%. Exporters can claim benefits by declaring their intent in shipping bills and will receive duty credit scrips for reimbursement. RoDTEP hopes to make Indian exports more competitive and integrate domestic manufacturing into global value chains.
If you plan to expand your business, such as exporting Indian-made goods to the international market, but need more funds to do so, consider turning to Tata Capital. Tata Capital offers business loans featuring a high loan amount with a tenure of up to 60 months, with minimal business loan documents required. The best part? We offer competitive business loan interest rates so that you can easily fulfil your business's financial needs.
The details mentioned in this blog may change from time to time and from vendor to vendor or government policies.
13 June 2024
6 mins read
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