1.5% RoDTEP necessary to make electronics India’s top export by 2025: ICEA

Over the past couple of months, the Indian government has launched a bunch of new schemes such as the Production Linked Incentive Scheme (PLI) and Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) to bolster the electronics sector in India. Now, the Indian Cellular and Electronics Association (ICEA) has released a report that highlights one way using which the electronics exports can be made better.

ICEA in collaboration with IKDHVAJ Advisers LLP published a detailed report on RoDTEP for the electronics sector today. For those of you who don’t know, RoDTEP stands for Remission of Duties and Taxes on Exported Products (RoDTEP). It’s a scheme that was announced by the government to boost exports by allowing reimbursement of taxes and duties.

Now, ICEA’s report says that a RoDTEP of at least 1.5% in the electronics category is required to make electronics India’s top export by 2025.

The report said that India suffers several disabilities vis-à-vis competing destinations such as China, Vietnam and Thailand, which make India’s exports uncompetitive. RoDTEP, which replaces the MEIS Scheme, is key to ensuring that Indian electronics exports regain the competitive edge. ICEA aims to make electronics India’s top export by 2025.

The report also said that electronics is a US$2 trillion industry, dominated by exports from China, Vietnam, Taiwan and Japan. It provides India with a tremendous opportunity to become a global leader in exports. Here, as per the agency, RoDTEP, rather the right RoDTEP, would play a critical role as the government is targeting US$1 trillion in exports by 2025 as part of the US$5 trillion GDP objective. ‘No country has reached the US$5 trillion mark without exports contributing at least 18-20%. India is no different,’ the report said.

The report also highlights the tremendous growth in electronics manufacturing and exports over the last three years. Electronics, which is India’s ninth-largest exports, has shown the highest response (85% increase) to export stimulus between 2017-2020, from amongst the top 15 exports from India. The report further shows that several countries are already allowing remission of indirect taxes, levies and duties that are allowed under WTO. It identifies and unbundles indirect taxes for the purposes of remission. The rates estimated in the report identify the unremitted duties/taxes/levies at the Central, State and local level, borne by exported electronics products, including prior stage cumulative indirect taxes on goods and services used in the production of such products.

The report recommends an estimated RoDTEP of 2% for smartphones, 2.34% for feature phones, 2% for tablets and laptops, 3.4% for battery chargers and 1.48% for battery packs.

“RoDTEP is critical to address India’s deep disabilities vis-à-vis its competitors for boosting electronics manufacturing and making it India’s number 1 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. An early finalisation of RoDTEP base rate and rates of priority products needs to be our immediate focus”, Pankaj Mohindroo, Chairman ICEA said on the occasion.