Input duty reimbursement for apparel and made-ups’ exporters under the new RoDTEP (Remission of Duties or Taxes on Export Products) scheme may be lower than the rates under the previous RoSCTL (Rebate of State and Central Taxes and Levies) scheme if the Government finds it difficult to meet the needs of all other entitled sectors with the available resources.

As per a report in The Hindu Business Line, budget constraints will limit the funds.

“The problem is that with the limited budget for RoDTEP, at around Rs. 13,000 crore annually, it will be very difficult to provide the RoSCTL rates to the textile sector as it would take up around Rs. 7,000 crore. The Government will be left with less than half the amount for all other sectors,” the official said.

It is worth mentioning here that last year, the Ministry of Textiles (MoT) had extended the RoSCTL on export of apparel and made-ups, which offers reimbursement of input taxes at 6 per cent or more of the exported value, till a time the RoDTEP was implemented.

It was said that the rates were likely to remain the same under RoDTEP.

The industry has been strongly demanding to expand the budget for the RoDTEP scheme as with the amount being currently considered, many believe it will not be possible to compensate exporters for all the input taxes paid.

“MoT has been making a case for retaining the RoSCTL rates of reimbursement for garments and made-ups under the RoDTEP as well but it looks difficult,” the official said.

On the other hand, industry is of the view that the RoDTEP is a duty refund scheme which provides refund of all taxes and duties hitherto not refunded through any other mechanism. If it is a refund scheme, the refund should not be limited to the budget constraints.

The apparel and made-ups sector, which were under primary focus at the WTO, switched over to the RoSCTL scheme from the MEIS much earlier in April 2019 and it was decided that it would be merged with the RoDTEP scheme for all exporters once it was announced.