- Merchandise Exports from India Scheme (MEIS) was introduced under Foreign Trade Policy of India (FTP 2015-20), as a part of Exports from India Scheme.
- The scheme provides incentive in the form of duty credit scrip to exporters to compensate for their losses on payment of duties. The scrips can be transferred or used for payment of a number of duties including the basic customs duty.
- In 2019, a World Trade Organization (WTO) dispute resolution panel ruled that MEIS was not in compliance with the global trade norms.
- Additionally, many exporters had persistently complained that the MEIS scheme doesn’t offset all the taxes.
- To address these issues, the government introduced the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme with a view to give a boost to the country’s outbound shipments.
- The government announced that whatever taxes, or duties or local levies imposed by the Centre, State or local governments that are not getting refunded through any other scheme, will be done through RoDTEP in a way that is compliant with the WTO norms.
- It is proposed to digitally refund to exporters, duties and taxes levied at the Centre, State and local levels.
- The RoDTEP scheme will replace the Merchandise Export from India Scheme (MEIS) in a phased manner.
Why in News?
- The Ministry of Commerce and Industry has announced guidelines and rates of the RoDTEP scheme for 8555 export items for a cost of ₹12500 crore to the exchequer.
- Though the scheme for exporters which replaced the ongoing Merchandise Exports from India Scheme (MEIS) came into effect on 1 January, the rates had not been finalized yet.
- The RoDTEP rates will vary from 0.5-4.3% of export value and will include sectors like marine, agriculture, leather, gems and jewellery, automobile, plastics, electrical, electronics and machinery.
- However, exporters in sectors like steel, pharmaceuticals, chemicals have been kept out of the scheme. Products manufactured or exported at export-oriented units and special economic zones have been excluded from the scheme for the time being.
- RoDTEP has created a mechanism to reimburse such central, state and local taxes, which are not being refunded under any other scheme. The refund would be credited to an exporter’s ledger account with the customs, and will be used to pay basic customs duty on imported goods.
- The credits can also be transferred to other importers. The rebate will have to be claimed as a percentage of the Freight On Board value of exports.
- A monitoring and audit mechanism, with an information technology-based risk management system has been put in place to physically verify the records of the exporters.
- RoDTEP is based on the principle that taxes and levies borne on exported products must either be exempted or remitted to exporters. The new scheme is not like the MEIS, which was an export incentive scheme, and is considered to be in violation of multilateral trade rules and has been challenged by the US at the World Trade Organization.