THE government has decided to expand the RoDTEP (Remission of Duties and Taxes on Exported Products) scheme to include exports from Special Economic Zones (SEZs) and Export Oriented Units (EOUs), sources told TNIE.
This decision was communicated to the Director General of Foreign Trade (DGFT) on February 16. DGFT may issue a formal notification amending the Foreign Trade Policy, said a source close to the development. According to trade analysts, the decision may be a disproportionately high bonanza for high import intensive exports from SEZs. However, it overlooks exports from other categories that are in a similar situation as SEZs.
Under the RoDTEP scheme, taxes and duties that are not rebated under any other scheme are refunded to exporters. This includes various central, state, and local duties/taxes/levies that are incurred in the process of manufacturing and distribution of exported products but are not refunded through schemes like GST or Duty Drawback scheme.
RoDTEP does not include all exports. Products exported from SEZs, EOUs, Electronic Hardware Technology Parks (EHTP), Biotechnology Parks (BTP), and Customs bonded warehouses are currently excluded from RoDTEP benefits. Also, exports under Advance Authorisation (which allows duty-free imports of inputs for export production), re-exported imported goods, exports subjected to minimum export price or export duty and supplies from Domestic Tariff Areas (DTAs) to SEZ/ Free Trade and Warehousing Zones (FTWZ) units are not eligible for RODTEP scheme.
According to Ajay Srivastava, founder and CEO of Global Trade Research Initiative (GTRI), extending the RoDTEP scheme to exports from SEZs may lead to overcompensation for import intensive exports from SEZs. “For large-scale exports from SEZs, such as electronics, petroleum products, and jewellery, which have high import content, RoDTEP could represent a significant incentive,” he says, adding that a lot of big exports from SEZs, like electronics (including smartphones), petroleum products, diamonds, and gold jewellery, add less than 10% of their value in India.
“This means over 90% of what makes up these products comes from imports, which don’t have to pay duties. If these exports get a 3% incentive from the RODTEP scheme, it means they earn an extra $30 for every $100 they make. If we add other incentives like PLI, the figure will be very high,” he added.