Exporters will have to wait longer to get incentives under the new Remission of Duties and Taxes on Export Products (RoDTEP) scheme.
Sources privy to the development said differences between the Commerce and Finance Ministries over the quantum of benefits to be released under the scheme is expected to delay finalisation of refund rates for various product categories, affecting finalisation of contracts by exporters.
The new scheme, which replaced the MEIS (Merchandise Exports from India Scheme), is applicable with effect from January 1, 2021. But in absence of rate of benefits finalised by the Commerce Ministry, exporters continue to remain in dark, resulting in delays in also a few export bound shipments, said some exporters who did not want to be named.
Sources said that the G.K. Pillai panel set to finalise rates under the scheme for thousands of products has suggested a design that may raise annual RoDTEP benefits to the tune of Rs 30,000 crore. The Finance Ministry, sources said, wants the annual benefits to be capped at around Rs 13,000-15,000 crore. This has prevented the Commerce Ministry from finalising the scheme as comments from the Revenue Department had not yet been received.
The government has budgeted only Rs 13,000 crore for the RoDTEP scheme for FY22, which is way below the scheme’s initial estimated annual cost of Rs 50,000 crore. Also, it is only a third of the Rs 39,097 crore the government approved for exporters in FY20 under the MEIS for many sectors.
Industry experts and former ministry officials said that with the government’s focus on productivity linked incentives (PLIs) and other stimulus measures announced as part of Atmanirbhar Bharat package, RoDTEP may have to be operationalised with a smaller budget.
The RoDTEP is designed to reimburse the input taxes and duties paid by exporters, including embedded taxes, such as local levies, coal cess, mandi tax, electricity duties and fuel used for transportation, which are not exempted or refunded under any other existing scheme.
The scheme was brought about with the intention to boost exports which were relatively poor in volume previously.
A smaller budget for it would mean that sectors outside the textiles would be left with little or no benefits. As the reimbursement scheme for the textiles sector, RoSCTL, will get subsumed in RoDTEP once it is launched, an estimated outgo of Rs 7,500 crore will have to be set aside only for it.