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DGFT office under the Ministry of Commerce has now notified the scheme guidelines along with the applicable rates under RoDTEP vide its notification No. 19/2015-20 dated 17th August 2021.
After a gap of almost 9 months from the notification date and after much dilly-dallying, the Government finally announced the RoDTEP rates for export products today. The scheme is supposed to replace the erstwhile MEIS and needs to be WTO compliant as it covers only those duties and taxes on exports that are not neutralized through GST and drawback.
While the actual amount of unutilized duty components on the products is presumably much higher, the rates are much lower than expected and with several constraints and value caps. This is clearly because of the budgetary constraint of only about Rs. 17000 crores
The most notable categories that are ineligible are those exported under Duty Exemption Schemes, by EOUs and by SEZs and manufactured in the new MOOVR scheme. The fact remains that these items also suffer the same amount of un-neutralized duty like other exports. The duty exemption, EOUs and SEZs schemes usually only exempt the BCD and IGST portion of the duties and not others like excise duty, electricity duty etc. The Government appears to be aware of this fact and would probably include them in the near future.
The rates are announced on 8550 line items, the maximum being 4.3% on textile goods and the lowest being 0.01% on precious metals and other high-value items. However, there are value caps on the items wherever the rates are in excess of 1.5%. About 30% of items have got the rate of 1%. Marine products have got upto 2.5% while vegetables and fruits have got only 1.4%. Tobacco, Minerals, Chemicals, Pharma, Fertilizers have been completely omitted. The steel sector has also been omitted even though they suffer the most. They may still not complain, however, given the high international prices that they are enjoying currently. Copper has got 0.3% while aluminium and aluminium products have got 1.2% to 2.2%. The engineering industry would not be happy with only 0.5% – 1% with very few items at 2%. Interestingly, the railway sector has got 1.8% for many products, that too without value cap.
Some of the interesting observations by Andees team are as follows:
Mobile phones got only Rs. 24.5 per piece as against upto 4% MEIS earlier.
Whisky and other liquor products have got 2%. Given the value cap of Rs. 2.9 per litre you should export a bottle of 750 ml of whisky at Rs. 108/- to enjoy a rate of 2%.
Precious metals, gems and jewellery etc get only 0.01%. So if a jeweller is able to export a necklace at Rs. 10 lakhs, be happy with RoDTEP of Rs. 100/-.
Overall, the Government appears to have done a fair job of allocating the benefit to a large sector of the industry given the budgetary constraint. We hope that in future these rates will be revised to reflect the actual duty and taxes suffered by the industry and more and more sectors would be covered along with exports made under Duty Exemption Schemes, EOUs, SEZs, bonded warehouses etc. who all suffer the hidden and unutilized duties.
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