28 May Revival of RoDTEP Scheme: A Step Towards Export-Led Growth
This article covers “Daily Current Affairs” and the Topic of Revival of RoDTEP Scheme: A Step Towards Export-Led Growth.
SYLLABUS MAPPING:
GS-3-Economic- Revival of RoDTEP Scheme: A Step Towards Export-Led Growth.
FOR PRELIMS
What is RoDTEP? What is the purpose of the RoDTEP scheme?
FOR MAINS
Why was the RoDTEP scheme introduced in place of the MEIS scheme
Why in the News?
The Government of India has restored the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme benefits for Advance Authorisation (AA) holders, Export-Oriented Units (EOUs), and Special Economic Zones (SEZs). This decision, announced on Tuesday, is expected to significantly boost India’s export competitiveness by ensuring tax neutrality for these key exporters. The RoDTEP scheme, which reimburses embedded taxes and duties not refunded under any other scheme, had lapsed for these units after February 5, 2024, prompting intense lobbying by export promotion bodies for its revival.
What is RoDTEP?
RoDTEP (Remission of Duties and Taxes on Exported Products) is a government scheme launched on January 1, 2021, to reimburse exporters for the embedded taxes, duties, and levies that are not refunded under any other existing export incentive schemes. It replaced the MEIS (Merchandise Exports from India Scheme), which was found to be incompatible with World Trade Organisation (WTO) rules.
Key Objectives of RoDTEP
1. Enhance Export Competitiveness: Reimbursing unrefunded duties/taxes (e.g., electricity duty, fuel tax, mandi tax) lowers the cost of Indian goods in global markets.
2. Ensure WTO Compliance: Designed to be WTO-compatible, unlike MEIS, ensuring India’s export subsidies comply with international trade rules.
3. Promote Make in India: Encourages domestic manufacturing and value addition by reducing the cost burden on exporters.
4. Provide Seamless Reimbursement: The scheme is digitalized and automated to ensure efficient, transparent, and prompt refunds via a credit ledger on ICEGATE (Indian Customs portal).
5. Support Broad-Based Export Sectors: Covers a wide range of sectors and products, ensuring that even sectors with high domestic value addition get fiscal support.
6. Boost Foreign Exchange Earnings: By making exports more competitive, the scheme helps increase India’s share in global trade and earns more foreign exchange.
7. Encourage Diversification of Export Basket: By reducing cost pressures, the scheme incentivises exporters to explore new markets and products, helping diversify India’s export portfolio beyond traditional goods.
8. Support Employment-Intensive Sectors: RoDTEP especially benefits labour-intensive sectors like textiles, leather, agriculture, and handicrafts, thus promoting job creation and supporting rural and semi-urban livelihoods.
Features of RoDTEP
1. Objective: RoDTEP aims to reimburse embedded taxes, duties, and levies that are not refunded under any other export incentive scheme, thereby ensuring tax neutrality on exported goods.
2. Coverage of Taxes: It covers hidden taxes and levies such as state VAT, mandi tax, coal cess, electricity duties, and fuel used in transportation, which were previously non-rebatable.
3. WTO Compliant: The scheme is WTO-compliant, replacing earlier schemes like MEIS (Merchandise Exports from India Scheme) that were challenged at the WTO for being export subsidies.
4. Eligibility: It applies to all export sectors (initially excluding AA holders, EOUs, and SEZs, now included as of 2025), making it more inclusive and broad-based.
5. Digital Processing: The rebate is issued in the form of transferable duty credit/electronic scrips via an automated, digital platform linked to Customs, ensuring transparency and ease of use.
6. No Double Benefits: Exporters cannot claim RoDTEP if they have availed benefits under certain other schemes like Advance Authorization (prior to restoration), Duty Drawback for the same taxes, or EOU/SEZ benefits, avoiding double claims.
7. Dynamic Rates: The RoDTEP rates vary by product/HS code, and are periodically revised by a dedicated RoDTEP Committee based on data provided by industry stakeholders.
8. Support for Export Competitiveness: By neutralising hidden costs in the export value chain, RoDTEP enhances the price competitiveness of Indian exports, supporting the government’s goal of boosting outbound trade.
Importance of RoDTEP
1. Enhances Export Competitiveness: RoDTEP helps Indian exporters compete more effectively in global markets by neutralizing embedded taxes and duties, thereby reducing the overall cost of exported goods.
2. Ensures Tax Neutrality: It ensures that no domestic taxes or levies are exported, aligning with the principle that exports should be free from any form of indirect taxes.
3. WTO Compliance: RoDTEP replaces the MEIS scheme and ensures that India’s export incentive framework remains compliant with WTO rules, reducing the risk of trade disputes and penalties.
4. Boosts Export Growth: By lowering the effective cost of exports, RoDTEP encourages greater participation in global trade, especially from MSMEs and sectors with thin margins.
5. Wider Sectoral Coverage: Unlike previous schemes, RoDTEP is broad-based, covering all sectors and types of exporters, including the recent inclusion of Advance Authorisation holders, EOUs, and SEZ units, thus expanding its impact.
6. Promotes Transparency and Efficiency: The scheme operates through a fully automated IT system, ensuring speedy and transparent processing of rebate claims with minimal human intervention.
7. Supports Make in India and Atmanirbhar Bharat: By making Indian goods more price-competitive globally, RoDTEP aligns with the Make in India and self-reliant economy goals, driving both manufacturing and exports.
8. Encourages Formalisation: The requirement of digital documentation and Customs integration under RoDTEP pushes exporters towards greater formalisation and compliance, strengthening overall trade governance.
Issues of promoting Exports
1. High Logistics and Infrastructure Costs: Poor infrastructure, congested ports, and high inland transportation costs increase the cost of Indian exports, making them less competitive globally.
2. Lack of Diversification in Export Basket: India’s exports are heavily concentrated in a few sectors like petroleum, gems & jewellery, and textiles. There’s limited presence in high-value and technology-intensive sectors.
3. Complex Regulatory Framework: Exporters face multiple clearances, documentation, and overlapping regulations from various departments, which lead to delays and increased compliance costs.
4. Limited FTAs and Trade Access: India has fewer Free Trade Agreements (FTAs) compared to competitors like ASEAN nations. This limits preferential market access and affects competitiveness.
5. Fluctuating Exchange Rates: Volatile currency movements can hurt exporters’ profitability, especially MSMEs that lack proper hedging mechanisms.
6. Inadequate Credit and Finance Support: Limited access to affordable credit, especially for small exporters, hampers their ability to scale and meet international standards.
7. Non-Tariff Barriers in Foreign Markets: Indian exporters often face sanitary and phytosanitary measures, quality standards, and certification issues in developed markets, which restrict market access.
8. Low R&D and Innovation in Exports: There is insufficient focus on value addition, innovation, and branding, leading to a dependence on low-value goods and commodities.
9. Global Uncertainties and Geopolitical Tensions: Exporters are vulnerable to external shocks like global economic slowdown, trade wars, and supply chain disruptions (e.g., COVID-19, Red Sea crisis).
Way forward
1. Upgrade Infrastructure and Logistics: Improve ports, roads, and logistics through PM Gati Shakti and National Logistics Policy to reduce export costs and delays.
2. Simplify Export Procedures: Ensure digitised and streamlined customs processes via single-window clearance to reduce regulatory burdens.
3. Diversify Export Basket and Markets: Promote high-value sectors (electronics, pharma, green tech) and expand to non-traditional markets like Africa and Latin America.
4. Support MSMEs and Startups: Improve access to export finance, certifications, and international exposure for smaller exporters and startups.
5. Strengthen FTAs and Trade Diplomacy: Conclude balanced FTAs with key partners and enhance India’s role in multilateral trade platforms.
6. Boost Value Chain Integration: Enhance FDI and manufacturing through PLI and support cluster development in export sectors.
7. Improve Standards and Quality: Align with global quality norms and enhance testing and certification capacity to meet international requirements.
8. Promote Brand India and Market Intelligence: Launch campaigns to promote Indian products and use data tools for market insights and buyer trends.
9. Ensure Stable Incentives: Provide policy stability and continuity in schemes like RoDTEP, SEIS, and DEH to support long-term exporter confidence.
Conclusion
The restoration of RoDTEP benefits to AA holders, EOUs, and SEZs is a timely and strategic step toward ensuring tax neutrality and global competitiveness for Indian exports. As global trade dynamics evolve and protectionist tendencies rise, schemes like RoDTEP play a crucial role in safeguarding India’s export momentum by lowering hidden costs and enhancing compliance with WTO norms. However, to truly harness the benefits, India must complement incentive-based schemes with broader trade facilitation reforms, including infrastructure upgrades, FTA expansions, and stronger institutional support for MSMEs. A stable, transparent, and supportive export ecosystem is essential for realising the vision of a self-reliant India with a strong global trade presence, thereby creating jobs, earning foreign exchange, and accelerating economic growth.
Prelims Questions
Q. With reference to the RoDTEP (Remission of Duties and Taxes on Exported Products) scheme, consider the following statements:
1. It aims to reimburse embedded taxes and duties not refunded under any other export incentive scheme.
2. The scheme is WTO-compliant and replaced the MEIS scheme.
3. Initially, the scheme covered Advance Authorisation holders and SEZ units.
Which of the statements given above is/are correct?
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
Answer: A
Mains Questions
Q. The RoDTEP scheme represents a significant shift in India’s export incentive framework. Discuss its key features and importance in promoting export competitiveness. Highlight the major challenges faced by Indian exporters and suggest a way forward for strengthening India’s position in global trade.
(250 words, 15 marks)
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