Disappointed with the exclusion of iron and steel, chemicals and pharma from the ambit of the new input duty remission scheme for exports and lower rates fixed for many sectors, exporters have asked the government to take a relook and make suitable additions and increases.
The rates under the Remission of Duties and Taxes on Exported Products (RoDTEP), the Centre’s new scheme to refund all input taxes and levies paid by exporters with an outlay of ₹12,450 crore, were announced on August 17 and will be applicable from January 1, 2021.
Profits may take a hit
In a petition to Commerce & Industry Minister Piyush Goyal, exporters’ body FIEO pointed out that when the RoDTEP Scheme was announced on January 1, iron & steel, pharmaceuticals and chemicals were not in the excluded categories. “Moreover, all the exporters of the product groups have made shipment under the RoDTEP and also have the notional RoDTEP rates in their shipping bills,” the letter added. This means that the pricing of the export items has been done assuming that they would get RoDTEP benefits. Now that it is likely that these categories will not get RoDTEP benefit, their profits may take a hit.
Agreeing with the government that some of these sectors, like iron and steel, were doing very well, the letter pointed out that though many units in the sector had impressive top lines, they were struggling with their bottom-lines. FIEO said the government must revisit the issue and extend the benefit to these sectors as well.
The exporters’ organisation also pointed out that several sectors had complained that the rates of reimbursements fixed for a number of sectors were lower than the data shared on the taxes and levies actually paid.
“We have urged those exporters to share the data submitted to the committee so that the issue may be re-looked into. We agree that the committee has only worked on the data submitted by the exporter/export organisations but there may have been limitations due to the prevailing pandemic condition. Therefore, if the industry is now providing comprehensive and updated data, the RoDTEP Committee may be requested to re-visit the matter,” the letter stated.
Exporters from sectors such as electronics and electrical products, engineering goods, and several agricultural items have expressed dissatisfaction with the RoDTEP rates, fixed between 0.5 per and 4.3 percent, of value of the exported products.
Rates in MEIS
The Merchandise Export from India Scheme (MEIS), which was replaced by RoDTEP, offered higher remission rates in general for most sectors. However, since the rates were not directly linked to the input taxes paid, it was ruled by the WTO as incompatible with multilateral trade norms and had to go.
Exporters argue that there is scope even within the RoDTEP, which had been painstakingly linked in a transparent manner with input taxes and levies paid by exporters, for rates to go up in many sectors as the actual rates announced were lower than what the taxes paid added up to.