The commerce department has sought Cabinet approval for a revamped export promotion scheme that will limit itself to refunding central and state levies. Officials said that the scheme — Rebate of State and Central Taxes and Levies (RoSCTL) — will be compliant with World Trade Organization (WTO) rules and comes amid allegations by the US that India was in violation of its international commitment through its export-promotion. Schemes, including those for special economic zones. The Donald Trump administration had dragged India to the WTO’s dispute settlement body, causing much embarrassment to the commerce department, which had designed and implemented the schemes.
When a similar scheme for the textiles sector was cleared in March, on the eve of general elections, the government had said that it would use an IT-driven scrip system at notified rates for rebate of all embedded state and central taxes and levies for apparel and made-ups. Sources said all export sectors will be covered in phases. The idea is to offer tax refunds through freely transferable scrips for all duties on inputs and raw materials that go into exports and that are not reimbursed. The revenue department had a few concerns on the use of scrips, which may be factored in when the decision is taken, sources said.
Once the sector is covered by the new scheme, the current sops offered under Merchandise Exports from India Scheme (MEIS) will be phased out. In any case, the life of the scheme is only till next March. Under RoSCTL, the duty drawback committee will fix the rate for scrips once the Cabinet approves the scheme. According to Budget documents, in 2018-19, the government had to forego revenue to the tune of Rs 65,720 crore due to eight export promotion schemes, with MEIS accounting for over half the share or Rs 36,600 crore.
