In good news for exporters, the Union Cabinet last week approved the introduction of 'Scheme for Remission of Duties and Taxes on Exported Products ' or RoDTEP. Following WTO's declaration that the popular Merchandise Export from India Scheme (MEIS) violates global trade rules, the Government initiated works on a new scheme, but long uncertainty over extension of MEIS beyond March 2020 has been a cause of concern for the sector.

The government said that RoDTEP will be WTO norms compliant. In an official statement, it is also stated that the new scheme will make the sector more competitive. Currently, certain taxes, duties, levies are outside GST, and are not refunded for exports, but RoDTEP will cover these taxes as well, thus ensuring that domestic taxes or duties are not exported. Taxes such as VAT on fuel used in transportation, 'Mandi tax, Duty on electricity used during manufacturing will be covered under RoDTEP.

Under RoDTEP, an inter-ministerial committee will determine the rates and items for which the reimbursement of taxes and duties would be provided. RoDTEP rates will have to be determined for each product, and the Commerce Minister, after the Cabinet meeting, added that the Centre would hold discussion with stakeholders to fix rates over the next six-eight months. Thus, the shifting will happen gradually in phases.

Meanwhile, latest exports data for February was released last week. Merchandise exports rose by 2.91 percent in February on a year-on-year basis to $27.65 billion, and this growth, though moderate, is encouraging in the wake of Novel Corona Virus. However, the challenge is not yet over and the impact could be more visible in export figures for March onward. So, the government must do its best to help the sector at this crucial juncture.