The Small and Medium Pharma Manufacturers Association (SMPMA) has sought Union Commerce Ministry’s intervention to make Remission of Duties and Taxes on Exported Products (RoDTEP) applicable on exports against advance license in accordance with Advance Authorisation Scheme towards incentivizing domestic pharma industry.
Advance Authorisation Scheme allows duty free import of inputs, which are physically incorporated in an export product. In addition to any inputs, packaging material, fuel, oil, and catalyst which is consumed / utilized in the process of production of export products, is also allowed.
“As of today, advance license covers only customs duty on the imports but when the raw material is imported and manufacturing is done in India, manufacturers have to incur a huge cost to cater to the domestic and international markets due to taxes on electricity and other input costs,” according to Nipun Jain, chairman, SMPMA.
“With barely 1% RoDTEP applicable on local goods, industry is advocating to make it applicable on imported goods against advance license towards incentivizing domestic industry,” Jain pinpointed.
After more than a year since the notification of the RoDTEP scheme by the Directorate General of Foreign Trade (DGFT), the Union commerce ministry had decided to include the pharmaceutical sector also under the RoDTEP scheme. At the Exporters Conclave in Chennai on October 16, 2022, Union minister of commerce and industry Piyush Goyal announced that his ministry will extend the benefits of RoDTEP scheme to the drug exporters in the country to make them globally competitive.
In the DGFT notification released on August 17, 2021, the pharmaceutical industry was left out of the RoDTEP scheme which had created ripples in the pharmaceutical industry in the country. Since then, the domestic pharmaceutical industry as well as the Pharmaceuticals Export Promotion Council of India (Pharmexcil) has been knocking at the doors of the Union commerce ministry to include the pharma sector also under the scheme which will ensure sustainability and competitiveness of drug exporters in the global market.
The Rs. 12,400 crore RoDTEP scheme, which replaced the Merchandise Exports from India Scheme (MEIS), would cover 8,555 tariff lines, or individual merchandise products traded by India internationally, with rates ranging from 0.3 per cent to 4.3 per cent.
The aim of the scheme is to refund, currently un-refunded duties, taxes, and levies, at the Central, state and local level, borne on the exported product, including prior stage cumulative indirect taxes on goods and services used in production of the exported product and such indirect duties, taxes, levies in respect of distribution of exported products.
The scheme also aims to refund exporters duties and taxes such as VAT on fuel used in transportation, Mandi tax and duty on electricity used during manufacturing, that have so far not been refunded.
