Jaipur: The tax policy of any country ensures that when an export is made, only goods and services are exported and no taxes paid during the manufacture of the product are exported in order to maintain a competitive advantage.
Under the Export of Goods from India (MEIS) program, India also reimbursed indirect and invisible taxed exports paid during the manufacturing and exporting process. Under MEIS, exporters were reimbursed 5-7% of the amount exported as an incentive against taxes collected by the state government and the Center for Duties Paid on Purchases of Diesel, electricity and other indirect taxes.
The MEIS regime was rendered obsolete in 2020 because it was not WTO compliant and the Center proposed RoDTEP (Remission of Duties & Taxes of Exported Products) which came into effect from January 2021. But the rates were set in August, which was 0.5. % of the amount of exports.
Atul Poddar, President of the Exporters Federation of Rajasthan, said: “We are surprised that in the textile garment sector, the RoDTEP rates for yarn and fabric have been set at 3.8% and 4.3%. % respectively, while quilts and quilts that use yarn and fabric as a raw material was set at 0.5%. This means that we encourage the exports of raw materials and discourage the finished product which has more value for exports. “
In international markets, Poddar said, many of our neighboring countries such as Bangladesh, Pakistan, Vietnam, Cambodia, among others, enjoy duty-free access to the US and European markets while the products Indians are subject to import duties.
“The reduction in reimbursements will make Indian products more expensive in the American and European markets. If we had secured legitimate refunds under the RoDTEP program, we would have had a good chance of competing and increasing our share in overseas markets. The government’s decision robbed us of our chances of surviving and even less of increasing exports to reach the target of 400 billion dollars set by the Prime Minister, ”Poddar added.
Poddar said the craft industry will approach the Center to review and restore reimbursement rates to levels available under MEIS.