Commerce Department Eyes 10% Hike in RoDTEP Scheme Allocation

New Delhi, Jan 30 (KNN) The Remission of Duty and Taxes on Exported Products (RoDTEP) scheme is poised to receive a 10 per cent increase in budgetary allocation for the fiscal year 2024-25, surpassing the previous fiscal's Rs 15,070 crore.

This augmentation is anticipated to facilitate the Commerce Department to extend the scheme's coverage to the iron & steel, pharmaceuticals, and chemicals sectors throughout the financial year, according to informed sources.

In contrast to sectors typically covered permanently under RoDTEP, iron & steel, pharmaceuticals, and chemicals are currently included on a case-by-case basis contingent on fund availability.

The Commerce Department foresees a 10 per cent rise in the RoDTEP scheme's allocation for 2024-25, with expectations that this increment will adequately meet the demands of the additional three sectors.

Consequently, there is optimism for the scheme's extension for the entire fiscal year, as indicated by an insider familiar with the matter.

As of now, benefits under the scheme are accessible for the identified sectors until June 30, 2024, with potential lapsing if not further extended.

The RoDTEP scheme, introduced in January 2021 to replace the WTO-incompatible MEIS scheme, refunds embedded duties and taxes on exported products. These include VAT on transportation fuel, mandi tax, duty on electricity during manufacturing, and other input taxes not covered by alternative schemes.

Initially covering 8,731 items from most export sectors, the scheme excluded organic and inorganic chemicals, pharmaceuticals, and iron & steel due to budgetary constraints arising from substantial benefits tied to their relatively high exports, according to a source.

However, the Commerce Department later extended the scheme to these remaining three sectors for a limited period, retaining flexibility for future decisions on extension.

It's crucial to note that the extension for the three identified sectors was a proactive measure taken by the Commerce Department to prevent breaching budget-imposed restrictions, clarifies the source, emphasising that it wasn't a directive from the Department of Expenditure.

The budget for the RoDTEP scheme in FY 2023 saw a 10 per cent increase to Rs 15,069 crore from Rs 13,699 crore in 2022-23.

Notably, India's exports during the April-December 2023 period contracted by 5.7 per cent to USD 317.12 billion, attributing the decline to adverse geopolitical conditions, including the Red Sea crisis disrupting exports to the EU, US east coast, and parts of West Asia and Africa.

(KNN Bureau)