The refund rates of Remission of Duties and Taxes on Exported Products or RoDTEP scheme is set in the range of 0.3% to 4.3% of the freight-on-board or FoB value of the exported products.
There are high chances for the government to raise the allocation of two crucial tax remission schemes for the exporters, which are RoDTEP and RoSCTL. It could be raised to ₹22,000-27,000 crores in the Budget for the next fiscal year.
There is a need to raise the outlay of the scheme, since the sharp rebounds in exports.
In such a condition, it is necessary to ensure that all exporters continue to get tax remission and to be in sync with global standards, the outbound shipments should remain truly zero-rated.
It is also necessary for FY23 as the export target will be much larger, which will call for more funds.
Structural reforms, adequate and sustained remission of tax will help improve the competitiveness of the exporters. It will also equip them to cash in on the current resurgence of industrial demand in the developed world.
It also helps them withstand the threat of the new Covid strain that could affect the supply chain. It is also important for the nation to hit its target of $1tn by FY28.
Under the RoDTEP scheme, the refund rates would be set up in the range of 0.3% to 4.3% of the FoB value of the exported products.
At the same time, under the Rebate of State and Central Taxes and Levies or RoSCTL scheme, the garment exporter is entitled to receive scrips up to 6% and 8.2% for the made-up sector.
Federation of Indian Export Organizations or FIEO has forecasted that the outbound shipments could rise to $460-475bn in FY23 if done is a first-time achievement.
In December, a record for the first three quarters of any fiscal year was broken when merchandise exports surged to $300 billion. As of now, it is poised to hit the aspirational target of $400 billion for the current fiscal.
The solution to recapture India’s lost export market share is sustained growth momentum for the next few years.
Until the current surge this fiscal year, India’s export remained below par for a decade, fluctuating between $250bn and $330bn a year since FY11.
That is the reason why these two programs were initiated, with the allocation of ₹12,454 crores for the RoDTEP scheme and ₹6,946 crores for the RoSCTL scheme.
Earlier this fiscal year government pledged to release ₹56,027 crores under various schemes to clear all the pending dues owed to the exporters until FY21.
This amount, along with these two schemes, was aimed at improving the liquidity of the Covid-hit exporters.
This is good news for exporters, who is hit by the spike in the global shipping costs that have reached 200%, leading to the supply chain crisis.
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