India to Evaluate Effectiveness of RoSCTL and RoDTEP Export Support Schemes
Quick Look
- India's government plans to assess the effectiveness of its two key export support schemes, RoSCTL and RoDTEP, amid shifting global trade dynamics and upcoming free trade agreements.
- The evaluation, to be led by Niti Aayog, will examine economic and sectoral impacts including productivity, investment, employment, and export competitiveness, with potential outcomes ranging from scheme tweaks to replacement.
AI-generated summary
Why It Matters
India's RoSCTL and RoDTEP export support schemes have been in place since 2019 and 2021 respectively. The government is evaluating them due to changing global trade dynamics, upcoming FTAs, and external challenges like demand fluctuations and evolving trade rules.
Synopsis
India's government plans to evaluate the effectiveness of two export support schemes amidst changing trade dynamics. These schemes, RoSCTL and RoDTEP, have been in place since 2019 and 2021, respectively. The upcoming analysis will consider various economic impacts, including productivity and investment levels. This evaluation is necessary due to global demand fluctuations and adjustments in international trade rules.
New Delhi: In the wake of changing global trade dynamics as well as many recent and upcoming free trade agreements (FTAs), the government is looking at evaluating its two key export support schemes in order to assess their effectiveness in sustaining export competitiveness and likely implications for exports, employment and industry if the schemes are withdrawn.
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According to a senior government official told ET that government think-tank Niti Aayog will soon start evaluation of the Rebate of State and Central Taxes and Levies (RoSCTL) and Remission of Duties and Taxes on Exported Products (RoDTEP) schemes, which have been in vogue since 2019 and 2021, respectively.
Positive, negative aspects
The plan is also to critically examine the positive and negative impacts of these schemes on domestic demand, supply as well as prices of the goods covered under each scheme, the person added.
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The RoSCTL is a remission-based export support scheme for the apparel and made-ups sector.
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The RoDTEP scheme, meanwhile, is a World Trade Organization-compatible remission-based mechanism for refund of taxes and duties not refunded under any other existing mechanism.
Economic and Sectoral Impacts
According to the official, emerging external challenges, including global demand fluctuations, cost pressures, evolving global trade rules, sustainability requirements, supply-chain reorganisation and digitalisation of trade processes, necessitate the evaluation of the export-support schemes.
The idea is to benchmark the two schemes against international mechanisms adopted by other countries for neutralising embedded taxes and levies, ensuring zero-rating of exports and strengthening export competitiveness. "Based on the evaluation, a decision would be taken to tweak the schemes or replace them with a new one," the official said.
The analysis would also include economic and sectoral impacts of the schemes on investment, employment generation, production cost, productivity, input-use efficiency, value addition, export pricing, profitability, capacity utilisation and growth across covered sectors.
What to Watch
AI outlook — possibilities, not facts
The evaluation may lead to tweaks or replacement of the RoSCTL and RoDTEP schemes based on findings
Likely · Within months
Open Questions
- What specific metrics will be used to evaluate the schemes' effectiveness?
- When is the evaluation expected to conclude?
- What alternative mechanisms are being considered if the schemes are replaced?
- How will the evaluation account for sector-specific differences in impact?
