Exporters Applaud RoDTEP Rate Restoration, Demand Permanent Framework
Exporters across India have expressed appreciation for the government's decision to restore the Remission of Duties and Taxes on Exported Products (RoDTEP) rates. However, industry leaders are characterizing this move as merely a short-term relief measure. They are urgently calling upon the central government to extend the crucial tax refund scheme indefinitely, eliminating any sunset clause, to prevent the export of embedded taxes and ensure sustained export performance.
Industry Leaders Acknowledge Government Action
Durai Palanisamy, Chairman of the Southern India Mills Association (SIMA), extended gratitude to Prime Minister Narendra Modi, Union Finance Minister Nirmala Sitharaman, Commerce Minister Piyush Goyal, and Textiles Minister Giriraj Singh for reinstating the RoDTEP rates. The scheme, originally launched in January 2021, is designed to refund various unrebated embedded taxes and levies, thereby enhancing the global competitiveness of Indian exports.
"We welcome the restoration of RoDTEP rates, but it offers only limited relief under the current conditions," stated M P Muthurathinam, President of the Tirupur Exporters and Manufacturers Association. He emphasized that ongoing geopolitical tensions, acute LPG shortages, and escalating costs for containers and raw materials have severely impacted the textile and manufacturing sectors.
Critical Need for Long-Term Stability
Exporters have highlighted that the restored rates must be extended beyond the current deadline of March 31. This is essential because export orders are typically negotiated and finalized at least six months in advance. The earlier, unexpected reduction in RoDTEP rates announced on February 23 came as a significant shock, particularly to vulnerable segments like powerloom, handloom, and spinning units already under financial stress.
RoDTEP scrips are vital for improving liquidity, especially for Micro, Small, and Medium Enterprises (MSMEs) that are grappling with high interest costs. A stable and predictable remission mechanism is crucial for Indian exporters to effectively leverage new Free Trade Agreements (FTAs) with major economies like the United Kingdom, the European Union, and the United States.
Global Competitive Pressures Intensify
The industry faces stiff competition from countries such as Vietnam, Bangladesh, Turkey, and China, where robust and consistent remission mechanisms are already in place. Exporters warn that even a marginal cost disadvantage of 1% to 2% could lead to a significant diversion of international orders away from India, undermining the nation's export growth trajectory.
Muthurathinam drew a stark comparison, noting that the current business environment, hampered by supply chain disruptions and cost inflation, is reminiscent of the extreme strains experienced during the Covid-19 pandemic. Many exporters are currently unable to confidently confirm new orders due to this climate of uncertainty and rising operational expenses.
Under the RoDTEP scheme, textile exporters had previously received refunds ranging from 2.5% to 4.7% of the export value. The collective appeal from the export community is clear: while the rate restoration is a positive step, a permanent, timeline-free extension of the RoDTEP scheme is imperative to safeguard India's position in the global market and support the millions employed in export-oriented industries.
