The Indian government, led by Commerce and Industry Minister Piyush Goyal, has recently announced a significant extension of the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme to include e-commerce exports. This move is expected to provide a substantial boost to the country’s e-commerce export sector, particularly benefiting Micro, Small, and Medium Enterprises (MSMEs).
The RoDTEP scheme, which has been operational for three years, offers refunds on embedded non-creditable central, state, and local levies paid on inputs used by exporters. Previously, e-commerce exporters were not eligible for these benefits, but with the new extension, they will now have access to the same advantages as traditional exporters. This decision is a response to the growing significance of e-commerce as a channel for international trade.
The sectors that stand to benefit most from this initiative include gems and jewelry, handloom, handicraft, AYUSH products, pharmaceuticals, leather, and textiles. It’s projected that this move could enable annual exports from MSMEs ranging between USD 1-2 billion.
For the financial year 2023-24, the RoDTEP scheme has a budget of Rs 15,070 crore, of which about Rs 12,000 crore has already been utilized till December. The scheme played a crucial role in supporting $450 billion worth of exports in the fiscal year 2023 at the cost of Rs 13,020 crore. In comparison, in the fiscal year 2021-22, it aided exports worth $421 billion at a cost of Rs 12,100 crore.
The tax refund rates under the RoDTEP scheme range from 0.5% to 4.3% of the product’s value and cover business-to-business exports of 10,610 products. These products, when exported through e-commerce or courier, will now be eligible for the RoDTEP benefit.
The Indian government aims to achieve $1 trillion in merchandise exports by 2030, with e-commerce exports expected to contribute significantly to this goal. The Foreign Trade Policy of 2023 has placed considerable emphasis on e-commerce exports, raising the limit per consignment of goods through e-commerce to Rs 10 lakh from Rs 5 lakh.
Additionally, a comprehensive handbook for MSMEs focused on e-commerce exports has been released by Minister Piyush Goyal. This handbook is available in multiple languages, including English, Hindi, Gujarati, and Kannada, and aims to guide new entrepreneurs interested in e-commerce exports.
In line with these efforts, the Directorate General of Foreign Trade (DGFT) has signed a memorandum of understanding with Shiprocket. This partnership is geared towards enhancing capacity building and providing support to e-commerce exporters through outreach sessions conducted by DGFT regional authorities under the Districts as Export Hubs Initiative.
This extension of the RoDTEP scheme to e-commerce exports represents a significant step by the Indian government towards enhancing the country’s export competitiveness and tapping into the growing global e-commerce market, which is expected to reach USD 2 trillion by 2030.