Finance Minister Nirmala Sitharaman had announced RoDTEP scheme in her Budget speech on February 1.
Briefing the media about this decision, Commerce Minister Piyush Goyal on Friday said with the rolling out of this new scheme, the Merchandise Export Incentive Scheme (MEIS) will be "phased out". Sitharaman had said the scheme will be launched this year itself.
The scheme is to incentivise exporters at an estimated cost of Rs 50,000 crore to the exchequer. It is proposed to digitally refund to exporters, duties and taxes levied at the Centre, State, and local levels, Sitharaman had said while presenting the Union Budget for 2020-21.
These taxes include value added tax (VAT), electricity duties and fuel used for transportation, which are not exempt or refunded under any other existing mechanism.
The move assumes significance as a WTO dispute resolution panel has ruled that MEIS was not in compliance with global trade rules.
Under the World Trade Organisation (WTO) rules, certain duties like state taxes on power, oil, water, and education cess are allowed to be refunded. The country's exports contracted for a sixth month in a row by 1.66 per cent in January to $25.97 billion.
During April-January 2019-20, exports slipped 1.93 per cent to $265.26 billion, while imports declined 8.12 per cent to $398.53 billion, leaving a trade deficit of $133.27 billion.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.