India Seeks To Clarify RoDTEP Scheme To US, Citing WTO Compliance

New Delhi, Dec 18 (KNN) India intends to engage in diplomatic discussions with the United States to demonstrate the World Trade Organization (WTO) compatibility of the widely adopted Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, as per official sources, reported Businessline.

This move comes in response to Washington's recent imposition of countervailing duties (anti-subsidy levies) on three exported items from India, perceived as retaliation against the RoDTEP scheme, as per Businessline

“RoDTEP is a perfectly WTO compliant scheme where we are not giving any incentive to our exporters but are only providing them a level playing field by remitting certain local levies and taxes on inputs. We are willing to hold discussions on the issue with the US and have already directed our team to do so. I think we should be able to convince them that RoDTEP doesn’t violate any WTO principle,” a senior government official told Businessline.

To safeguard against potential penalties, the Directorate General of Foreign Trade (DGFT) and the Directorate General of Trade Remedies (DGTR) will actively assist exporters in streamlining the documentation process, ensuring its alignment with US requirements for efficient clearance, the official stated.

Implemented in January 2021, RoDTEP scheme provides targeted rebates for embedded duties and taxes, including VAT on transportation fuel, mandi tax, and electricity levies incurred during the manufacturing process of exported goods.

Under the scheme, the remission rates, in the range of 0.3 per cent to 4.3 per cent, have been “meticulously’’ calculated by a special team, hence, the government is confident that it meets WTO norms.

However, the RoDTEP scheme has recently been subjected to countervailing duties by both the United States and the European Union in separate investigations related to specific Indian exports.

In a statement delivered to the Lok Sabha on December 13, Minister of State for Commerce and Industry Anupriya Patel disclosed that paper file folders, common alloy aluminum sheet, and forged steel fluid end blocks exported to the United States, as well as certain graphite electrode systems exported to the European Union, have been targeted by these investigations and are now subject to finalized countervailing duties (CVD).

While the CVD attributable to the RoDTEP scheme is currently assessed as relatively modest, the official emphasized the need for prompt action to address this issue due to its potential for larger consequences in the future.

Notably, the United States, in its justification for imposing CVD, cited the need for a "reasonable and effective system" to verify input usage, consumption levels, and indirect tax burdens.

“What the US authorities want is a highly technical kind of report from those who are under investigation. So, the DGFT, in association with the DGTR or the team, is now trying to sensitise exporters about the kind of documentation which they need to maintain to satisfy the US investigating authorities,” another official said.

(KNN Bureau)