What is RoDTEP scheme?

• The government restored full benefits under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme to exporters amidst the ongoing West Asia crisis disrupting global trade.

• In February, the government halved the rate of duty benefits under the RoDTEP scheme. 

• The RoDTEP rates and value caps as specified as applicable on February 22 are restored with effect from February 23 to March 31 for all eligible export products.

Why the government took this decision?

• The exporting community was earlier grappling with the high US tariffs and is now facing challenges from the West Asian crisis triggered by the joint attack of the US and Israel on Iran.

• Recent developments in West Asia have posed challenges for maritime logistics, including shifts in routing and transit patterns. 

• These have affected logistics costs and shipping schedules for export consignments moving to or through the region.

• In view of the evolving geopolitical situation and its implications for maritime trade, the government has decided to restore the rates and value caps under the scheme.

• This step is intended to provide timely support to Indian exporters facing elevated freight costs and war-related trade risks arising from disruptions in the Gulf and the wider West Asia maritime corridor.

Remission of Duties and Taxes on Exported Products (RoDTEP)

• RoDTEP is based on the globally accepted principle that taxes and duties should not be exported, and taxes and levies borne on the exported products should be either exempted or remitted to exporters.

• Major components of such taxes are electricity duty and VAT on fuels used in transportation/distribution.

• The scheme creates a mechanism for reimbursement of taxes, duties and levies, which are currently not being refunded under any other mechanism, at the central, state and local level, but are incurred by the export entities in the process of manufacture and distribution of exported products.

• The Central Board of Indirect Taxes and Customs (CBIC) is implementing the scheme. 

• The scheme is being implemented from January 2021 and the rebate is issued as a transferable electronic scrip by the CBIC.

• It is compliant with World Trade Organisation (WTO) norms and implemented via a comprehensive end-to-end digital platform to ensure transparency and efficiency.

• It is expected to boost India’s exports and competitiveness in the global markets.

• The budget allocation for RoDTEP scheme for the financial year 2025-26 is Rs 18,232 crore.

• RoDTEP is implemented through a fully digital system integrated with the Customs Automated System, under which duty credit scrips are generated electronically and maintained in an electronic ledger. 

• This has improved transparency, reduced processing time, and enabled seamless utilisation of credits for payment of customs duties.

• The government periodically reviews the scheme, including product coverage and applicable rates, based on sectoral representations, data analysis, and recommendations of the RoDTEP Committee, to ensure that the scheme continues to support export competitiveness.

• By providing support to crucial export sectors, the government aims to not only enhance their competitiveness but also create employment opportunities and contribute to overall economic growth.