Indian Electrical & Electronics Manufacturers’ Association (IEEMA), the leading industry association for electrical and electronics manufacturers in India, has expressed its disappointment on the new Remission of Duties and Taxes on Exported Products (RoDTEP) norms.
Incentives Under RoDTEP Scheme for Export of Cables
RoDTEP scheme is effective from 1st January 2021. After a delay of almost 8 months Ministry of Commerce, Govt. of India on August 17, 2021, via a notification laid the rates and norms of RoDTEP scheme for 8,555 export items for a annual budgeted cost of ₹ 12,500 crore including wires and cables.
Under the new RoDTEP scheme, the cable industry is being given incentive of 0.8% per meter for electric cables to 0.9% per meter for fibre optic cables on F.O.B (Freight On Board) value which the industry experts deem insufficient to tackle the competition in foreign markets. This is much lower than the 2% incentive given in the erstwhile MEIS (Merchandise Exports from India Scheme). The Government announced to discontinue the MEIS scheme from January 1, 2021 as it was not compliant with World Trade Organization (WTO) norms.
Expressing his disappointment Mr. Vijay Karia, Vice President, IEEMA, said “This (Incentive under RoDTEP scheme) does not cover the input duties and taxes on manufacturing and inland transportation costs, which as a matter of principle should not be exported in order to remain competitive in exports. We hope this is an interim step from the government and proper rates will be affixed shortly after taking inputs from industry”.
What was MEIS and why was it discontinued?
MEIS or Merchandise Export from India Scheme (Scheme) was a part of the Foreign Trade Policy on India applicable from 1st January 2015 to 31st December 2020. Under this scheme exporters were given 2% to 5% incentives on F.O.B value.
MEIS Scheme was challenged by the US at WTO wherein a dispute panel at the WTO ruled against India. U.S. stated that the export subsidy program provided by the Government of India distorted trade by providing direct subsidies.
Export Duty Drawback
Apart from RoDTEP Export Duty Drawback for Export of Cables is another indirect incentive provided by Indian Government to exporters against the import duty paid for raw materials used to make finished goods. For insulated wires and cables this incentive has been laid down to 1.8% of F.O.B value since 28th January 2020 which earlier used to be 2% of F.O.B value.