RoDTEP Scheme – Good Intentions But Greater Clarity Required

Foreign Trade Policy (“FTP”) issued by the Ministry of Commerce prescribes various incentives to the exporters to ensure competitiveness of Indian exports in the international markets. These incentives are operationalized through schemes such as advance authorization, export promotion of capital goods (“EPCG”), duty drawback, merchandise exports from India scheme (“MEIS”), rebate of state and central levies and taxes (“RoSCTL”), etc. These schemes aim at neutralizing the duties and taxes suffered by the exporters on their procurements to ensure that the tax costs do not form part of export value. However, schemes such as MEIS provide the incentive to the exporters as a percentage of the export proceeds, and therefore perceived as export subsidy.

India is constrained to revisit and rationalize the export incentives as World Trade Organization (“WTO”) has held some of the schemes under the FTP such as MEIS, EPCG etc., to be inconsistent with the framework agreed between the member countries for granting such incentives. Therefore, the Government is phasing out such non-compliant schemes and introducing schemes compliant with the WTO framework.

Please click here to read the full article by Manish Mishra and Shikha Parmar, published in Mondaq.