Special Economic Zones (SEZs) and Export-oriented Units (EoUs) may soon be brought into the ambit of the government’s new scheme for remitting import duties, probably as early as the coming fiscal, with the process of fixing the reimbursement rates already in the works, sources have said.
The new Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, which seeks to reimburse all input taxes that go into the manufacture of an exported item, was introduced for most sectors from January 1, 2021, but it had excluded units in the SEZs and EoUs.
“There was no justification for excluding EoUs and SEZs from the RoDTEP scheme as all exporters, whether they operate from the special zones or the domestic area, should be reimbursed if they are paying input taxes. This will hopefully get rectified soon,” a source tracking the matter told BusinessLine.
The Export Promotion Council for EoUs and SEZs (EPCES) has already submitted the required inputs to the three-member committee, headed by former Union Secretary G K Pillai, for determining the reimbursement rates for various sectors in the EoUs and SEZs.
“We have submitted data to the committee in respect of about 200 SEZ units and EoUs. These are details such as the value of output, the inputs going into it and all the taxes paid so that the rates can be arrived at,” said Alok Chaturvedi, Director General, EPCES.
Rates already fixed by govt
Since the government has already fixed RoDTEP rates for most export sectors operating in the country outside the SEZs (Domestic Tariff Area), the exercise of fixing rates for those operating in SEZs or EoUs would not be an elaborate exercise. “While fixing rates for units in SEZs and EoUs, the committee just wants to ensure that they are comparable to those in the domestic area and if there are some additions that need to be made,” Chaturvedi said.
Growth in export from SEZ
Exports of goods from SEZs have been rising steadily and have posted higher growth in the first three quarters of the fiscal compared to overall exports from the country. In the April-Dec 2021 period, overall goods exports rose 49.66 per cent to $301.38 billion while goods exports from SEZs increased 60 per cent to $ 36.4 billion, per figures shared by the EPCES. Services exports from SEZ increased 17 per cent in the period to $ 51 billion.
The RoDTEP replaced the popular Merchandise Exports from India Scheme in January last year as the MEIS was ruled as a banned export subsidy by the WTO because it did not transparently link the reimbursement rates to input taxes paid by exporters. The MEIS was extended to both units in the domestic area as well as the SEZs and EoUs.