Info on refund rates for garment exporters.

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To compensate exporters for the input taxes not reimbursed under existing schemes, Commerce Ministry has announced new scheme, RoDTEP, from January 1, 2021.

Concerned about the fate of exporters from the garments and made-ups sector who had to shift to the new incentive scheme, Remission of Duties and Taxes on Export Products (RoDTEP), from January 1 2021, the Textiles Ministry has sought details from the Commerce Ministry on the rates of reimbursement they will be entitled to, a source closely tracking the matter has said.

“Exporters of garments and made-ups are nervous as they have no idea what reimbursement rates they will get under the new RoDTEP scheme and whether they would be comparable to the earlier scheme RoSCTL. The Textiles Ministry therefore wants to find out what the rates are before they are announced so it can have some say in the matter,” the official told BusinessLine.

The Commerce & Industry Ministry announced the implementation of the RoDTEP scheme for goods exports from January 1, 2021 to compensate exporters for the input taxes not reimbursed under existing schemes, including embedded levies (such as mandi tax, stamp duty etc.).

The popular Merchandise Export from India Scheme (MEIS) scheme was simultaneously withdrawn as it was ruled as a banned export subsidy by a WTO panel since the reimbursement rates were not calculated strictly on the basis of input taxes paid. As the outlay for RoDTEP is set to be much lower than the over  50,000 crore allocated for the MEIS, there are expected to be cuts in reimbursement rates.

“Exporters do not have any issues with an alternative incentive scheme as long as they are not losing out in terms of the rates. Since the Commerce Ministry is yet to announce the rates for different sectors, the discomfort is growing as exporters do not know on what basis they should price their products,” the source said.

“Textile Ministry officials had got in touch with the G K Pillai Committee working out the RoDTEP rates to find out what it had proposed for garments and made-ups. However, they were directed to the Commerce Ministry, which has already received a draft report from the committee with the rates proposed for a number of items. The Textile Ministry has now sought information from the Commerce Ministry which hopefully it will get soon,” the source said.

Exporters of garments and made-ups (items stitched from any type of cloth, other than a garment such as bed-sheets, cushion covers, lamp-shades etc) are especially concerned as they had already shifted from the MEIS to a new scheme called the Rebate of State and Central Taxes and Levies (RoSCTL) scheme in 2019 to mitigate the incidence of State VAT and other State taxes (including embedded taxes) that was seen as being WTO compatible. While they were under the impression that the reimbursement rates that were fixed at around 6 per cent of the value of exports of garments and around 8 per cent for made-ups would remain the same under RoDTEP, now they are not sure, the source said.