The commerce and industry ministry has floated a cabinet note for the adoption of a new export incentives scheme in order to be in compliance of World Trade Organization (WTO) norms.
The Rebate of State and Central Taxes and Levies (RoSCTL) scheme is currently available on the export of garments and made-ups. This will now be extended to all exports in a phased manner, and will replace the Merchandise Exports from India Scheme (MEIS), which was challenged by the US last year in WTO.
“We are thinking of having RoSCTL as the template for all schemes,” an official said.
The move assumes significance in the backdrop of the US challenging India’s export schemes under the WTO’s Agreement on Subsidies and Countervailing Measures.
The US dragged India to the global trade disputes redressal forum for violating its commitments under the Agreement on Subsidies and Countervailing Measures (ASCM) in its export promotion schemes, pegging the quantum of India's subsidies at $7 billion.
The Cabinet in March approved the RoSCTL scheme, which would allow rebate of all embedded state and central taxes for apparel and made-ups through an IT-driven scrip system. This would replace the existing Rebate of State Levies (RoSL) scheme that provided rebate of only certain state taxes.
The new scheme is expected to provide for the reimbursement of duties on export inputs and indirect taxes through freely transferrable scrips, which can be used to pay duties.
The RoSCTL rebates the embedded taxes including central excise duty on fuel used in transportation, embedded Central Goods and Services Tax (CGST) paid on inputs, purchases from unregistered dealers, inputs for transport sector and the embedded CGST and compensation cess on coal used in the production of electricity.
The MEIS would be withdrawn in phases and the scrips’ rate would be fixed three months after the Cabinet’s approval.
"The commerce ministry and the revenue department will monitor the revenue foregone," the official said.
Under existing WTO rules, a country can no longer offer export subsidies if its per capita gross national income (GNI) is above $1,000 for three years in a row. In 2017, WTO notified that India’s GNI was $1,051 in 2013, $1,100 in 2014 and $1,178 in 2015.
Source: moneycontrol.com