Steel, chemical and pharma exporters might become eligible for duty refunds under RoDTEP exports

As part of its push to become Atmanirbhar (self dependent), India surpassed its target of exporting merchandise worth $400 billion in March this year. While petroleum products, jewellery and vehicles lead the way, engineering exports have also gone up by 50 per cent. The growth in India’s exports has prompted it to extend a new export duty refund scheme to steel, pharma and chemical firms, to incentivise the outflow of Indian products in global markets.

Brought in to ensure compliance with WTO

The Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, compensates exporters for non-creditable duty and taxes, which are included with the value of exported goods. It was brought in to replace Merchandise Exports from India Scheme (MEIS), which apparently violated World Trade Organisation (WTO) rules, that bar countries from giving financial incentives to exporters. The MEIS was also being misused for rebate fraud by exporters claiming higher incentives by mislabelling the products that they were shipping out.

Industries not satisfied?

When the RoDTEP was introduced last year, steel, chemical and pharmaceuticals were left out, but now discussions are underway to include them as products which can bring in duty refunds for exporters. In comparison to MEIS, the new scheme RoDTEP only refunds the levy collected on exported goods, which cant be recovered, and doesn’t go against regulations set by WTO. But rates introduced for remissions are lower than what the industries reportedly pitched to the government, which was already below what MEIS got for them.

Where do exports stand now?

The rates of remission and guidelines released this year, have revealed that the focus has been on promoting products which don’t form a bulk of India’s exports. Steel exports had picked up by 25 per cent in 2021, but then went down by 36 per cent, 52 per cent and 75 per cent, in May, June and July this year respectively. Pharma exports from India have grown by 103 per cent since 2013-14, but the product may be hit by recent reports of contaminated medicines from the country killing 66 children in Gambia.

Chemicals have also been doing fairly well with a 106 per cent increase in exports for 2021, and will probably receive a boost from the RoDTEP.