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The government is developing a framework to assist exporters in dealing with investigations by importing countries into Remission of Duties and Taxes on Exported Products (RoDTEP) support, which can occasionally result in the implementation of countervailing tariffs.
US investigators have already visited exporting operations to ensure that the benefit provided by RoDTEP is proportionate to input taxes. However, many exporters have been unable to establish the link completely due to documentation inadequacies.
According to an official, the US and the European Union levied countervailing tariffs on specific units only because they could not provide the necessary papers to these nations' investigating agencies. No countervailing duty has been applied to the entire product. The commerce ministry is helping Indian exporters maintain documents in the right format and order to produce them before investigators.
“We will be giving guidance notes from DGTR (directorate general of trade remedies) to units so that whenever an investigation happens, they should be in a position to give the proper documents,” the official added.
Besides checking the documents of units, investigation authorities also look at the official verification mechanism to ascertain whether the government is randomly checking the incidence of duties to ensure that the benefits under the RoDTEP only compensate for taxes and are not some kind of subsidy. Export subsidies can be challenged at the World Trade Organization (WTO).
The RoDTEP scheme was rolled out in response to the successful challenge to five of India’s five key export promotion schemes by the US at the WTO in 2018. The schemes that were challenged were the Export Oriented Units, Electronics Hardware Technology Park and Bio-Technology Park (EOU/EHTP/BTP) Schemes, the Export Promotion Capital Goods (EPCG) Scheme, the Special Economic Zones (SEZ) Scheme, Duty-Free Imports for Exporters Scheme (DFIS), and the Merchandise Exports from India Scheme (MEIS). The RoDTEP scheme covers around 10,436 export items with tax refund rates ranging from 0.01% to 4.3%.
A government official said, “We are trying to set up a joint verification mechanism of DGFT (Directorate General of Foreign Trade), DGTR, and DoR (department of Revenue), where officials would randomly verify certain plants/units on the issue and keep records.”
Products the US investigated – paper file folders, common alloy aluminium sheets, and forged steel fluid end blocks – involved reimbursement of levies like electricity duty, Value Added Tax on fuel or Agricultural Produce Marketing Committee (AMPC) taxes. The European Commission, too, has conducted a similar probe on certain graphite electrode systems from India. These investigations led to the imposition of countervailing duty on these products.
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