ICEA seeks minimum base rate of 1.5% for electronics sector under RoDTEP

  • ICEA pointed out that products with higher demand for export must magnetize the best of RoDTEP rate based on the level domestic value addition
  • The base rate is now very crucial because out of the $5 trillion GDP mission, export of electronic goods must target $1 trillion by the end of 2025

India’s electronics industry has put forward a proposal to the government prior to the budget that will enhance India’s export of electronic goods and augment value addition. The industry body suggested that there should be a minimum base rate of 1.5 percent for the Remission of Duties and Taxes on Exported Products (RoDTEP) in the electronics domain based on power costs in manufacturing and utilization rate of logistics.

The industry body India Cellular & Electronics Association (ICEA) in its report said that products that have higher demand for export must magnetize the best of RoDTEP rate based on the level of domestic value addition. The exports of electronic goods in India averaged 19.57 INR Billion from 1991 until 2020, reaching an all-time high of 90.40 INR Billion in November of 2020 and a record low of 0.24 INR Billion in July of 1991.

The Indian government unleashed RoDTEP on September 14, 2019, to enhance exports by permitting reimbursement of taxes and duties, which are not exempted or refunded under any other scheme in accordance with World Trade Organization (WTO) norms. The electronics industry has an international value of $2 trillion, which is massively dominated by Japan, China, Taiwan, and Vietnam in terms of exports. Electronics has offered India the largest support in becoming a spearheader in the export domain, and in fact, it is claimed to be the largest traded commodity after oil.

The base rate is now very crucial because out of the $5 trillion GDP mission, the export of electronic goods must target $1 trillion by the end of 2025. No country has reached the $5 trillion mark without exports contributing at least 18-20 percent and India is no different, ICEA added.

Pankaj Mohindroo, chairman ICEA, said to the media, “RoDTEP is critical to address India’s deep disabilities vis-à-vis its competitors for boosting electronics manufacturing and making it India’s number one export by 2025. This needs to be an ongoing exercise to address the adverse impact on India’s competitiveness, of high taxes which remain unremitted. Early finalization of RoDTEP base rate and rates of priority products needs to be our immediate focus.”

RoDTEP has been launched to wipe out the Merchandise Exports from India Scheme (MEIS) to assure that India’s export status gains traction all over the world. The report said, till recently, over 370 electronic items received MEIS between 2-4 percent.

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