Aluminium industry seeks 5% RoDTEP rate
ECONOMY & POLICY

Aluminium industry seeks 5% RoDTEP rate

The Ministry of Finance announced implementation of Remission of Duties and Taxes on Export Products (RoDTEP) scheme and extending benefit to all export goods, with effect from 1 January 2021, in response to which the aluminium industry seeks 5% RoDTEP rate to boost exports.

The announcement of the RoDTEP scheme is seen as a relief for exporters post withdrawal of the Merchandise Exports from India Scheme (MEIS) and is said to provide much needed impetus to boost Indian exports.

However, the pendency of notifying the sector wise remission rates under RoDTEP scheme is creating uncertainty for Indian exporters due to ambiguity with respect to pricing of goods and thereby impacting Indian exports. The recently announced Union Budget 2021-22 has kept provision of Rs 13,000 crore for RoDTEP, which has been significantly curtailed from Rs 50,000 crore allocation for RoDTEP scheme when first announced by the Finance Minister in September 2019.

According to the Aluminium Association of India (AAI), following the withdrawal of MEIS, in absence of any export incentives or remission mechanism, the aluminium exports are struggling to remain globally competitive as compared to the major exporting countries, especially China. In India, the high incidence of numerous unrebated Central and State taxes and duties impedes the growth potential of the aluminium sector in India. The various taxes constitute 15% of aluminium production cost which is amongst highest in the world. This is said to have an adverse impact on the sustainability and competitiveness of the aluminium industry and further renders Indian exporters vulnerable and uncompetitive in comparison to global players in international markets.

The duties and taxes should not be exported as such and should be remitted back to encourage domestic value addition and export of finished products. Under MEIS, the aluminium exports were eligible for a 2% reward rate which itself does not provide ample cushion to remain competitive against current bearish market conditions. The government support is extremely crucial at this juncture to reduce burden of taxes and levies with at least 5% remission rate under RoDTEP to boost exports and survive this challenging phase.

Written from an AAI statement.

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