Merchandise exports from India scheme(MEIS) are no longer and are going to be replaced by the Remissions of Duties and Taxes on Exported Products(RoDTEP) scheme. The MEIS Scheme facilitates incentives to the exporters in the case of infrastructural and any cost inefficiency.
This scheme in 2019 at the dispute settlement body is taken as a subsidy and is against the rules of the World Trade Organization(WTO). The WTO’s subsidies and countervailing measures(SCM) Agreement prevents any country's government from exceeding a particular threshold of advancements assisting financial support to their exporters through any incentives.
This made the central government of India offer a choice that should comply with the WTO’s guidelines. With the RoDTEP scheme, exporters are compensated for their non-creditable duty/tax costs like EB tax, stamp duty, mandi charge, fuel tax, and so on that are generally placed in the export goods.
The RoDTEP scheme is effective from January 2021 in India. The ministry of commerce after many delays and finally announced its regulations and rates under this RoDTEP scheme in August 2021. This scheme’s revised remission rates are notified that the exporters will be compensated with the embedded taxes which are not recovered as it is ingrained in the cost of the export commodity in the world market.
As per the commodity rates under the RoDTEP scheme, it is clear that the government focuses on the commodity with low export volume and tries to enhance their potential in the International market.
MEIS vs RoDTEP
Some of the vital differences between the MEIS and RoDTEP schemes are:
In the MEIS scheme, the exporter will get a special incentive based on the percentage of their export pricing which can be used by them to make payment for their import duties. In the RoDTEP scheme, the exporters can obtain a portion of the export pricing in the form of scrip but that can be only used to make payment for the embedded taxes and not for anything else.
As per the MEIS schemes, an incentive is offered to the exporters through physical or transferable scrips they can use to make payment to any customs duties. On the other hand, the RoDTEP scheme offers electronic, transferable credit but is limited to making the payment only for the fundamental customs duty.
According to the WTO regulations, the MEIS scheme does not fulfill all its rules but where the RoDTEP is designed completely to fits its rules and regulations.
With the MEIS schemes, the exporters can benefit from 0.5%-4.3% of the FOB value of their exported commodity that comes under the HS codes. In addition, the RoDTEP aids are also limited up to a specific amount for every unit according to their product which is identical to the Duty Draw-back scheme that further adheres to ceiling prices.
Advantages of the RoDTEP scheme
Every international business owner and exporter should be aware of the numerous advantages of the significant RoDTEP scheme. The advantages are as follows:
Offering refunds for non-repayable duties/taxes
Several charges, including Value Added Tax (VAT), Coal Levy, CED, Mandi Levy, and others, are fully refundable under this RoDTEP scheme. Most of the goods that were previously subject to the MEIS scheme and RoSTCL are now under the regulatory control of the latest RoDTEP schemes. It just provides exporters with substantial economic power and versatility, and also the capability and motivation to outsource even more products across the country's borders.
Full digital credit framework
Exporters will be paid using digital records and transferrable digital credits. These digital credits are given to exporters while they take advantage of the scheme and would be strictly regulated by the previously discussed digital record. The deployment of the whole claims process facilitates more organization and is flawless than a paper-based offline process.
Offers efficient verification and enhanced security
With the help of a complete electronic platform, process activities take place much quicker than offline. All the validation and reliability checks of the exporter documents are done by a reputed IT company to provide a speedy and efficient transaction in a short span.
A perfect Scheme across all industry segments
Any organization that does their export outside of India will benefit more from this new scheme. The government of India has appointed a committee to ensure whether all the sectors come under this scheme and creates an awareness about the advantages of the schemes among the exporters to help them use these schemes effectively for their sectors without facing any difficulties. This new scheme offers huge benefits for the Industries especially in India, penetrating their product in the International market.
Steps to follow for the RoDTEP scheme’s benefits
All the exporter’s credits will be maintained in the ICEGATE(Indian customs Electronic Gateway) portal. The exporter necessarily should specify the RODTEP scheme benefits for the specific export products in the shipping bill and they can obtain a credit scrip for that product. The newly generated credit scrips can be employed to pay for the basic customs duties, and refunds, further it also can be exchanged with any other importers.
Here are the complete steps to be followed:
1. Specify the claim for the RoDTEP scheme benefit in the shipping bill.
2. You have to complete the Export General Manifest(EGM) and then your benefits will be processed by the customs.
3. When your claim is processed as per your submitted shipping bills you will receive the benefits in the ICEGATE portal.
4. You can create your RODTEP credit ledger account after logging in to the ICEGATE portal.
5. Once you successfully created the ledger account you can obtain the credit scrips for your shipping bills.
6. You can make use of these obtained credit scrips to pay your taxes and duties or even you can exchange them with other importers.
In this new digital age, the RoDTEP scheme is essential and significant. The impact of COVID-19 is highly destructive and the Indian exporters need a lot of financial assistance to cope with the International market. Further, this RoDTEP scheme perfectly complies with the WTO's regulations which is a bonus.