The government is contemplating expanding export benefits provided by the Remission of Duties and Taxes on Exported Products (RODTEP) scheme to companies operating in special economic zones (SEZs) and export-oriented units (EOUs).
Currently, the RODTEP scheme refunds various central and state duties, taxes, and levies on input products to exporters in hardware technology parks, biotechnology parks, and customs-bonded warehouses. The current RODTEP rates range from 0.3% to 4.3%.
In an office memorandum, the commerce department has proposed extending the RODTEP scheme to SEZs following the implementation of ICEGATE (Indian Customs Electronic Data Interchange Gateway) in SEZs. ICEGATE serves as the national portal of Indian Customs, facilitating interaction between trade users and the customs department.
In August 2021, the government announced tax refund rates under the RODTEP scheme for 8,555 products, excluding SEZs and EOUs. However, economic analysts suggest that for SEZs engaged in large-scale exports, such as electronics, petroleum products, and jewelry, which have significant import content, RODTEP could serve as a substantial incentive. Nonetheless, certain exports are excluded from the scheme, including those from SEZs, EOUs, electronic hardware technology parks, biotechnology parks, customs-bonded warehouses, exports under advance authorization, and re-exported imported goods.
There are concerns that extending RODTEP to SEZs may result in overcompensation for import-intensive exports from these zones, potentially overlooking exports from other sectors facing similar challenges. The decision could disproportionately benefit import-intensive exports from SEZs, raising concerns about fairness and equity in trade policy.
