What is RODTEP Scheme?
Rodtep Full form is Remission of Duties and Taxes on Export Products Scheme. The RoDTEP Scheme was an initiative launched by the Indian central government in order to boost exports. The RoDTEP scheme replaces the pre-existing MEIS scheme (Merchandise Exports from India) and aims to augment the competitiveness of India in the international market by providing refunds on various taxes and duties levied on exported products.
The scheme was rolled out with the objective of offsetting the high taxes and duties bore by exporters during the production and distribution process. The RoDTEP scheme was expected to increase the production of Made in India products and attract foreign investment. The scheme turned out quite beneficial for SMEs in India. RoDTEP eased the exports and offered multiple benefits to traders and exporters. Increase in profitability and share in the overseas market, just to mention a few.
In this article, we will discuss the RoDTEP benefit, the requirements for traders and exporters to avail of the benefits, and how the scheme works.
We will also take a dive to know how traders and exporters can take advantage of the RoDTEP Scheme to throttle their exports, as well as the challenges and limitations of the scheme.
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Need for the RoDTEP Scheme
The US has challenged India’s export subsidies to India’s products under Merchandise Exports from India Scheme at the World Trade Organization. The panel said the government had violated the provisions of its trade policy and the trade agreements. The panel subsequently urged the withdrawal of the export subsidies programme. It also led to the creation of a RoDTEP scheme for keeping India WTO (World Trade Organization) compliant and also supporting low-volume exports from India.
Benefits of the RoDTEP Scheme
The RoDTEP Scheme offers a wide range of benefits for traders and exporters. Here are some of the key advantages of the scheme:
1. Increase in competitiveness
By offering refunds for duties and taxes, the RoDTEP Scheme increased the competitiveness of Made in India products in the global market. Refunds directly affect the exporters’ production costs and their products become more competitively priced on the international markets.
2. Reimbursing taxes and duties that were previously non-reimbursable
RoDTEP scheme completely reimburses all types of duties and taxes such as Mandi tax, CED, Coal cess, VAT etc. The products which didn’t come under the MEIS scheme, are incorporated under the RoDTEP scheme. This a such a great relief for exporters from India that now they can export without much financial burden.
3. Automated seamless verification and greater security
The development of a completely automated digital platform has made it possible for processes to go through more quickly than they would if they were carried out manually. With the aid of a regulated and secure IT firm, all of the document verification and security checking that is done on behalf of the exporters on the platform will be done easily, ensuring that transactions go much more quickly and smoothly than they did in the past.
4. Improvement in cash flow
The RoDTEP scheme extends refunds on taxes and duties paid on exporting goods. This improves the cash flow for exporters, as now they receive refunds within a specified timeframe, and they can reinvest those funds in their export-oriented units to further enhance their production capabilities.
5. Fully automated electronic credit system
Exporters will receive their refunds using shiftable electronic credits on an electronic ledger. When exporters use the programme, these electronic credits will be provided to them and can then be governed and monitored by the aforementioned electronic ledger. The entire reimbursement process is automated, which only makes it more streamlined, fluid, and paperless than an offline operation.
6. Improvement in ease of doing business
The RoDTEP Scheme aims to simplify the process of claiming refunds for taxes and duties incurred on exporting goods. The scheme has replaced the earlier MEIS scheme, which had a complex process. RoDTEP introduced a new automated process for claiming refunds, which will reduce the time and effort required to claim refunds, making it easy for export-oriented units to operate.
Documents required for RoDTEP Scheme
To avail of the benefits of the RoDTEP scheme, you need to have the following documents ready before applying:
- Shipping bills
- RCMC copy
- Class 3 DSC
How to Avail benefits under RoDTEP Scheme?
To avail of the RoDTEP benefit, the following steps should be followed:
Step 1. Shipping bill declaration
Declaration of shipping bill is mandatory for exporters, irrespective of the fact that they want to claim RoDTEP.
Step 2. ICEGate registration
The beneficiary first has to register on the ICEGate platform. For that, they require Email, Mobile Number and an Import-Export Code. Then a login ID and password will be generated.
Step 3. Credit Ledger Creation
Exporters need to create a RoDTEP credit ledger account. The credit ledger account will contain the following information:
- Transfer Scrips
- Scrip Details
- Scroll Details
- Approved Scrips Transfer
- Transaction Details
Step 4. Application procedure
Exporters can file an application on the ICEGate portal.
The remission of duties and taxes on exported products will be in the form of transferable credits or electronic strips, that they can maintain in the ledger.
Requirements of the RoDTEP Scheme
If you wish to avail of the benefits of the RoDTEP scheme, make sure you fulfil the following requirements:
- Most importantly, if you want to access the scheme benefits, then your products should be manufactured in India. Only when your goods, which are supposed to be exported are products manufactured in India, you can avail of the benefits of this scheme.
- If you have e-commerce platforms and export products then your products must be manufactured in India.
- Any industry in India, whichever sector it falls into can avail the benefits of the RoDTEP scheme.
- There is no minimum requirement of turnover for your company to access the benefits of RoDTEP.
- Under any circumstances, you can re-export goods under this scheme.
Items Ineligible under the RoDTEP scheme
There are certain items that are kept out of the domain of the RoDTEP scheme. As per the BVR Subhramanyam commerce secretary, items belonging to certain categories are performing fine and hence kept out of the ambit of the scheme.
The following items are ineligible:
- Goods that are banned under Schedule-2 of Export Policy in ITC (HS).
- Goods that are imported and have their mention under para 2.46 of FTP.
- Deemed Exports.
- Goods are subject to a minimum export price or export tax.
- Goods exported through EOU & produced in EHTP and BTP.
- Goods claiming the benefits of notification No. 32/1997- Customs (1st April 1997).
- Goods manufactured fully or partially in a facility under section 65 of the Customs Act, 1962 (52 of 1962).
- Goods exported from FTZs or EPZs or SEZs (Special Economic Zones).
- Goods exported under Advance License.
RoDTEP vs MEIS scheme
| RoDTEP | MEIS |
| World Trade Organisation compliant | Was not compliant to World Trade Organisation |
| 0.5% to 4.3% Rebate on Free On Board value, based on the product category | 2% to 5% of the Free On Board value Rebate |
| Transferable electronic scrips | Refunds were physical transferable scrips |
Conclusion
The implementation of the new RoDTEP scheme in India is a game-changer that gave the country a significant boost in terms of revenue and exports. With the government’s ongoing efforts to expand and promotes international trade and increase export revenue, this scheme is poised to take things to the next level.
The RoDTEP scheme allowed exporters to create better solutions for consumers by lowering costs. Exporters now can focus on delivering high-quality products at lower costs.
Furthermore, the scheme eliminates the burden of taxes or duties on imported capital goods, which can create compliance-related issues for businesses. This ensures that the manufacturing process remains streamlined, reducing any potential bottlenecks that could arise due to regulatory hurdles.
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FAQs
Have the RoDTEP scheme rates been notified?
The central administration (Central Board of Indirect Taxes) announced its rate and guideline for the RoDTEP scheme. The notified rate under RoDTEPS for various industries includes a rate in the range of 0.2 – 0.2 – 0.4 /min. However, it will not release a specific amount for a certain product.
Who are eligible for the RoDTEP scheme?
Every Indian exporter is eligible for the RoDTEP scheme. The eligibility is subjected to certain conditions though.
How do I claim my RoDTEP amount?
Follow the following steps to claim benefits:
Step 1: Visit ICEGate.
Step 2: Apply using Class 3 DSC
Step 3: Provide necessary import export documentation (shipping bills, RCMC copy etc.)
Step 4: Submit.
What is the validity of RoDTEP scrip?
The validity of the RoDTEP scrip is two years from the date of their generation. Earlier it was one year.
What are RoDTEP scheme rates for pharma?
RoDTEP rates for pharma are 0.3 per cent to 4.3 per cent.
Can RoDTEP scrips be sold?
When an exporter receives the RoDTEP scrips, they can be transferred or sold to other importers or used to pay customs duties.
Which tax is exempted for export?
Export products or services are regarded as zero-rated supplies. No GST will be assessed on any export products or services.
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