Indian officials have announced that the government will extend the expanded duty remission scheme for exporters beyond the September deadline.
This move will provide relief to the pharmaceuticals, steel, and chemicals sectors, which have been facing various challenges recently.
Let’s know about the latest updates on the export duty refund scheme further extended.
Government Extends RoDTEP Scheme
In December of last year, the Indian government expanded the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme to include certain steel products, pharmaceuticals, and chemicals.
The RoDTEP scheme aims to refund taxes and duties that were previously not reimbursed under existing schemes, providing much-needed relief to exporters.
Thus, by expanding the scheme to include these sectors, the government hopes to encourage more exports and support these critical industries.
These industries have been facing various challenges.
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Government Expects Sufficient Funds to Extend RoDTEP Scheme for Whole FY 2023-24
The commerce department has also announced that tax refunds for the expanded products under the RoDTEP scheme will be available until September 30, 2023.
However, the department is now assessing whether it has enough budgetary resources to fund the tax remission for the entire financial year 2023-24.
The government officials are hopeful that the planned allocation of Rs 15,069 crore for FY24 will be sufficient to continue extending this benefit.
It might also include the newly added sectors.
But, if the government decides to broaden the scheme to include the entire iron and steel sector, an extra Rs 1,000 crore will be required.
A decision will be made by September 30 on this proposal
Expanded RoDTEP Scheme to Boost Exports of Pharmaceuticals, Chemicals, and Steel
The expanded RoDTEP scheme, which went into effect on January 1, 2021, is set to recover central, state, and municipal levies incurred in the manufacture and export of products that are not covered by any other incentive scheme.
The initiative is expected to benefit exporters of these products by enabling them to compete for orders as demand slows in important developed markets.
According to official figures, exports of chemicals, medicines, and certain steel items have totaled $61 billion until February of the financial year, accounting for around 15% of total merchandise despatches.
Foreign Trade Policy 2023 Highlights Timely Tax Remission for Exporters
The recently announced Foreign Trade Policy 2023 has emphasised timely tax remission for exporters as part of a shift away from any incentive-based approach.
This move aligns with World Trade Organization (WTO) standards and aims to enhance the country’s export competitiveness.
The RoDTEP plan, which complies with these standards, has been extended to cover 10,342 export products, up from 8,731 previously.
The scheme operates on the principle that exports can be tax-free, and levies can be reimbursed, making it vital to meet the $1 trillion merchandise export objective by 2030 from $447 billion in 2022-23.
Why does the RoDTEP Scheme matter for exporters?
The RoDTEP scheme is based on the principle that exports can be tax-free, and levies can be reimbursed.
This concept is vital to enhance India’s export competitiveness and meet the $1 trillion merchandise export objective by 2030.
With the scheme now covering 10,342 export products, up from 8,731 previously, the government aims to ensure that exporters receive timely tax remission to boost their competitiveness in the global market.
The RoDTEP scheme is compliant with World Trade Organization (WTO) standards, providing a more level playing field for Indian exporters.
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