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The RoDTEP Scheme, or Remission of Duties and Taxes on Export Products, replaces the earlier Merchandise Exports from India Scheme (MEIS), which was discontinued due to its non-compliance with WTO norms. Unlike MEIS, RoDTEP is structured to align with international trade regulations, ensuring Indian exporters can compete without facing trade disputes.
This article provides a comprehensive overview of the RoDTEP Scheme, its eligibility, benefits, and how to apply for and use the incentives. Read on to learn more…
The RoDTEP Scheme is a short form of Remission of Duties and Taxes on Export Products, an initiative by the government to refund the taxes and duties paid while producing and distributing export goods. These taxes are normally not returnable under any existing mechanism like the GST or duty drawback schemes as they have always been part of the supply chain. Hidden costs to exporters included taxes on electricity, fuel, and other inputs that went into manufacturing, thus increasing the price of Indian goods.
RoDTEP reimburses these costs so as not to increase the price of Indian exports in other markets, making them competitive.
Key Beneficiaries:
The scheme targets all Indian goods exporters including manufacturer and merchant exporters.
However, some sectors are out of the RoDTEP basket, such as SEZ units, EOUs, and exporters utilizing duty exemption schemes.
Sectors Covered:
The Scheme is available to diverse sectors, such as:
The Scheme has encouraged Indian exporters to focus on these sectors and operate on a level playing field, boosting their profitability and market share globally.
The RoDTEP Scheme is designed in a very streamlined manner to allow exporters to claim duty refunds as easily and efficiently as possible. Here are its essential details:
Almost all exporters are eligible for the RoDTEP Scheme, except certain exclusions:
Businesses excluded from RoDTEP:
Exporters can avail RoDTEP scheme by taking the following steps:
Declaration in Shipping Bill:
At the time of exporting products, an exporter needs to declare their intention to avail of the RoDTEP scheme by marking the appropriate declaration in the shipping bill.
Ensure that all the details provided are accurate, such as HS codes and export item descriptions, as these are used for deciding the rate.
Verification and Approval:
Once the shipment is cleared and the shipping bill is processed, the customs authorities verify all the details.
When approved, the RoDTEP credit is computed based on government-notified rates available for such exported goods.
Duty Credit E-Scrips Issued
The approved credit issued takes the form of transferable duty credit e-scrips, which are electronically available in the exporter's account with the Directorate General of Foreign Trade (DGFT).
These e-scrips can be used to offset import duties or transferred to other businesses.
Utilization or Transfer:
Exporters can use the e-scrips for payment of basic customs duty on imported goods.
Alternatively, the e-scrips can be sold in the market.
Under the RoDTEP Scheme, there are several benefits for Indian exporters that raise the profitability and competitiveness of Indian exports in the world market. Here's a closer view at a few key benefits:
One of the main advantages of the RoDTEP Scheme is that it directly addresses the issue of unrebated taxes and duties. Most indirect taxes on fuel, electricity, raw materials, and others were not refundable earlier, which used to increase the cost of production. The RoDTEP Scheme remits such taxes, which effectively reduces the cost burden of exporters. With lower operational costs, businesses find it easier to offer competitive pricing in international markets.
RoDTEP makes Indian exports appear more attractive and economical compared to those available from other countries because it refunds the embedded taxes. Indian goods can thus be sold at more competitive prices without compromising quality. This makes India better placed in international trade, thereby opening up considerable potential for market share gains in export segments such as textiles, agricultural goods, and engineering goods.
It simplifies the export process with an easily claimable, transparent duty remission system. Furthermore, since it flips the spotlight away from incentive-based schemes like MEIS and focuses on a direct duty remission model, this ensures that exporters garner perceptible benefits without long bureaucratic delays. Also, by issuing transferable e-scrips, businesses can reap their benefits or transfer them quickly.
Overall, the RoDTEP Scheme reduces operational friction for Indian businesses and enables them to focus on scaling up their exports and improving profitability.
The RoDTEP Scheme has significantly transformed the Indian export ecosystem by ensuring tangible benefits in all sectors and a few challenges.
The scheme has undergone transformation in various industries, mainly for those with high embedded tax structures:
Textiles and Apparel:
Of the various sectors contributing to India's exports, the textile sector has benefited most from RoDTEP. Dyes, chemicals, and electricity, amongst other input taxes, are reimbursed under RoDTEP, making Indian textiles more competitive for export-oriented manufacturers looking to go global.
The Agriculture and Marine Products sector.
Often-Perishable exports such as fruits, vegetables, and seafood carried heavy logistics and processing taxes. The scheme has reduced these costs, enabling Indian agricultural and marine products to hit international markets at attractive prices.
Leather and Footwear:
Tanning chemicals and machinery are highly embedded with taxes. The leather industry was not able to compete in international markets. RoDTEP has assisted in reducing production costs, and the sector has seen a rise in exports.
Engineering Goods and Auto Components:
Engineering exports, including machinery and automotive parts, have benefited from reduced costs on raw materials and power consumption.
Despite the array of benefits availed through the scheme, there are a few issues stated:
Delayed Issue of E-Scrips:
Most exporting companies have complained of long delays in receiving their duty credit e-scrips after submitting their shipping bills. Such delays may affect the processing of funds and liquidity for enterprises that rely on timely remissions.
Varied Rates Among Sectors:
Exporters have also complained about the inconsistency in remission rates, with some not fully offsetting embedded taxes for specific products. Some sectors have been portrayed as being unfairly served.
Exclusion of units in SEZ and EOU
Though the scheme aims to benefit most exporters, SEZs, EOUs, and those using duty exemption schemes are exempted, a differential treatment within the export community.
Limited Awareness and Understanding:
Most of the small and medium-sized exporters are not aware of the process of claiming the benefits or facing difficulties in complying with the documentation requirements.
The RoDTEP Scheme has undoubtedly empowered Indian exporters by reducing hidden costs and enhancing global competitiveness, but it is necessary to address the delays in its implementation, inconsistencies in rates, and exclusion gaps to make the best of it. Exporters can also make their processes more efficient with robust financial solutions such as Karbon, which enhances cross-border payment management and optimizes export processes.
The RoDTEP Scheme replaced the Merchandise Exports from India Scheme (MEIS) as India’s flagship export benefit program. Here’s how these two schemes differ across critical aspects:
Compliance with WTO:
The WTO declared that MEIS is in contravention of the international trade treaties. RoDTEP was conceived in line with these norms so that India does not find itself at the receiving end of trade wars.
Taxes That Are Embedded:
RoDTEP zeroes in on unrebated taxes and duties, unlike MEIS, thus keeping incentives very tax-centric, efficient, and transparent.
Effective Distribution of Resources:
Compared to MEIS, the RoDTEP is more focused. The benefits are being channeled exactly in areas where they are needed.
Thus, while being ambitious about living up to global standards, RoDTEP makes sure that Indian exporters continue to remain at par with international best practices, which is a result of serious evolution in India's trade policies.
The export process can be challenging, but with tools tailored for Indian exporters, success is within reach. At Karbon, we understand the unique needs of Indian businesses operating globally. We manage cross-border payments and optimize your financial workflows to help you stay competitive and compliant.
Leverage our expertise to complement the RoDTEP Scheme and take your export business to great heights. Let Karbon simplify international trade for you.
No, SEZ exporters and Export Oriented Units (EOUs) are not eligible for RoDTEP. The scheme is focused on other categories of exporters to refund unrebated taxes.
Not all products are covered under the RoDTEP. The government has notified specific product categories and rates, so exporters need to check the official list to see if their goods qualify.
Remission rates depend on the product and are computed based on embedded taxes like electricity, fuel, and other non-creditable duties involved in production.
There is a requirement for exporters to notify their intention to avail of RoDTEP benefits at the time of filing a shipping bill, through the ICEGATE system. After due verification, the admissible amount is credited as e-scrips, which can be utilized to pay customs duties or traded.
Exporters suffering from inappropriate remission rates can raise their grievances with export promotion councils or the concerned authority for further perusal. However, changes depend on government notifications.
Exporters not being eligible for RoDTEP can avail of other government incentives such as Advance Authorization or Duty Drawback schemes, depending upon the eligibility of exporters.
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