Industry seeks review of tax refund scheme

Mumbai: The tax refund scheme for exporters that has ignored strategic sectors like pharmaceuticals, chemicals and iron & steel has raised concerns, with industry associations seeking a review from the government. The Centre had announced the scheme, which provides succour to about 8,500 products (or tariff lines) with refunds ranging between 0.5% and 4.3%, on August 17.
Exporters, hit by sky-high freight rates and other levies over the last 15 months, were hopeful of relief through the government’s Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, announced to boost exports.
In certain sectors, the scheme offers little respite as exporters feel the ‘low rates’ would largely make their products uncompetitive.
“The pharma industry has submitted a comprehensive report proving at least wherein 5-6% of duty remission was logically and scientifically justified. Not giving RoDTEP remission of duty will lead to intense pressure on the industry and affect exports. The industry is becoming extremely competitive globally, and China has become abrasively aggressive in RoW (rest of world) markets which have a 50% share globally. In the other 50% — highly regulated markets of the US and the EU — prices are already under pressure.
Alongwith MEIS (Merchandise Exports from India Scheme) dues and exclusion of RoDTEP duty, both the top-line and bottom-line of the $25-billion export industry will be severely impacted, he added.
Exclusion of steel, which contributes about 2% to India’s GDP, from the scheme has also raised concerns.
Jindal Stainless MD Abhyuday Jindal said, “This is an encouraging move by the government to fire up the export potential of the country. However, the steel industry anxiously awaits inclusion in the RoDTEP list. It’s a much required move to fulfil this government’s vision of ‘Made in India; made for the world.”
Further, the government has postponed the implementation of the RoDTEP scheme for export-oriented units, and units in SEZs. “Until these units are covered, they have to face stiff competition from other competitors such as Turkey, Vietnam, Morocco,” Vijay Kalantri, president, All India Association of Industries, said. India’s export-oriented units from agro-processing sectors are facing stiff competition from these countries, who have duty free access to the EU.
“We have asked all our 27 councils to resubmit the data (where rates are low) so that the issue can be taken up. Also, we hope the committee will be formed quickly to address the issue,” A Sakthivel, president, FIEO, told TOI.
Denial of RoDTEP to certain sectors (which are doing well), amounts to whipping the winning horse, an industry expert said.