Govt to handhold exporters for defending RoDTEP benefits

NEW DELHI : The government is working out a mechanism to help exporters handle the investigations by importing countries on support extended to them under the Remission of Duties and Taxes on Exported Products (RoDTEP) that sometimes leads to the imposition of countervailing duties.

The US investigators have visited exporting units in the past to verify whether the benefit given under RoDTEP is in proportion to the taxes on inputs. In many cases the exporters have not been able to fully establish the link because of some gaps in the documentation.

An official said that the countervailing duties have been imposed by the US and the European Union on certain units only and that too because they could not produce the right documents to the investigation authorities of these nations. There has been no product-wide countervailing duty.

The commerce ministry is helping Indian exporters to maintain documents in the right format and order which can be produced before investigators.  

“We will be giving guidance notes from DGTR (Directorate General of Trade Remedies) to units so that whenever an investigation happens, they should be in a position to give the proper documents,” the official added.

Besides checking the documents of units, investigation authorities also look at the official verification mechanism to ascertain whether the government is randomly checking the incidence of duties to ensure that the benefits under the RoDTEP are only compensating for taxes and are not some kind of a subsidy. The subsidies for exports can be challenged at the World Trade Organization (WTO).

The RoDTEP scheme was rolled out in response to the successful challenge to five India’s five key export promotion schemes by the US at the WTO in 2018. The schemes that were challenged were the Export Oriented Units, Electronics Hardware Technology Park and Bio-Technology Park (EOU/EHTP/BTP) Schemes, the Export Promotion Capital Goods (EPCG) Scheme, the Special Economic Zones (SEZ) Scheme, Duty-Free Imports for Exporters Scheme (DFIS), and the Merchandise Exports from India Scheme (MEIS). The RoDTEP scheme covers around 10,436 export items with rates of tax refund ranging from 0.01% to 4.3%.

A government official said, “we are trying to put up a joint verification mechanism of DGFT (Directorate General of Foreign Trade), DGTR and DoR (department of revenue), where officials would randomly verify certain plants/units on the issue and keep record”.

Products which the US have investigated –  paper file folders, common alloy aluminium sheet, and forged steel fluid end blocks – involved reimbursement of levies like electricity duty, Value Added Tax on fuel or Agricultural Produce Marketing Committee (AMPC) taxes. The European Commission too has conducted a similar probe on certain graphite electrode systems from India. These investigations led to imposition of countervailing duty on these products.