The rate has been capped to Rs 24.5 per unit for smartphones and Rs 2.30 for PCBAs
Following the government’s announcement to refund taxes under the export promotion scheme– Remission of Duties and Taxes on Exported Products (RoDTEP), the Indian Electrical & Electronics Manufacturers’ Association (IEEMA) asked the government to revise rates of tax refund for the electrical equipment industry as these are “abysmally low”.
The association said in a statement that the announcement by the government has left the electrical industry largely disappointed at the turn of events even though it was awaiting clarity on the rates for a long time.
Notably, the rates for different sectors include 0.5 per cent, 2.5 per cent and 4 per cent.
Under the RoDTEP, various central and state duties, taxes, and levies imposed on input products, among others, would be refunded to exporters with an aim to boost exports.
The scheme has replaced Merchandise Export from India Scheme (MEIS), which ended in December last year.
The government announced the RoDTEP scheme in March last year, came into effect from January 1 this year and the rates have been finally notified after seven-and-a-half months in August 2021. Additional funds will be provided at pro-rata basis for the period January to March.
Stating that the announcement went against expectations, IEEMA Vice President Vijay Karia said, “The RoDTEP scheme for the cable industry is an abysmally low rate of 0.8 per cent per meter for electric cables to 0.9 per cent per meter for fibre optic cables.”
This does not cover the input duties and taxes on manufacturing and inland transportation costs, which as a matter of principle should not be exported in order to remain competitive in exports, he added.
“We hope this is an interim step from the government and proper rates will be affixed shortly after taking inputs from industry,” Karia said.
IEEMA President Anil Saboo said the scheme disappointed many exporters as the rates are much lower than MEIS rates with lesser budget allocation.
“The main aim of the RoDTEP scheme was to give a boost to Indian exports by offering a level playing field to the domestic industry abroad. But looking at the present notification we believe that the ambitious target of achieving USD 1 trillion in exports by 2025 will be achieved only if the government reviews the rates especially for the electrical equipment industry which have excellent potential to grow by three times,” he said.
ICEA Shares Similar Sentiments
The India Cellular and Electronics Association (ICEA) shared similar disappointments on the rates for mobile phones and PCBAs, citing the need to rework the capping on rates.
The rate has been capped to Rs 24.5 per unit for smartphones and Rs 2.30 for PCBAs.
“The capping of the RoDTEP rates on mobile phones and PCBAs needs to be reworked. The condition of non-availability of RoDTEP for SEZs’, EOUs’, Advance Authorization Bond under Section 65 etc., is also not logical since these dispensations also suffer the unabsorbed indirect taxation on fuel, electricity etc,” Pankaj Mohindroo, Chairman, ICEA told news publication Economic Times.
ICEA, which represents companies like Lava, Vivo, Motorola, Foxconn and Wistron, had previously proposed a RoDTEP rate of 2 per cent on smartphones, 2.4 per cent on feature phones, 2 per cent on tablets/laptops, 3.4 per cent on battery chargers and 1.48 per cent on battery packs.
MEIS offered 2-4 per cent of free-on-board export value as duty credit scrips to handset and component exporters.
Mohindroo, however, said that the body is satisfied with the RoDTEP rates on laptops, tablets, desktops, keyboards, earphones, speakers and batteries with the current level of domestic value addition.
ICEA previously estimated that its proposed RoDTEP rates would deliver an annual incentive of close to Rs 120 crore, based on remission of big-ticket items such as indirect taxes on transport and power, and embedded taxes on inputs.
