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After more than a year since the notification of the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme by the Directorate General of Foreign Trade (DGFT), the Union Commerce & Industry Ministry has at last decided to include pharmaceutical sector also under the RoDTEP scheme. At the Exporters Conclave in Chennai on October 16, 2022, Union Minister of Commerce & 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, 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 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 were so far not being refunded.
It is a fact that the Indian pharmaceutical sector is largely fueled by exports and it is the third-largest foreign exchange earner for India. Export promotion schemes such as MEIS had indeed helped the pharma exporters to remain competitive in the global market. In such a background, the exclusion of pharma sector from the RoDTEP scheme was a big disappointment for the pharma industry as the incentives received through the MEIS have kept the industry sustainable and remained competitive in the global markets. In spite of several hurdles, the Indian pharmaceutical industry has shown its resilience as it has outperformed and exported US$ 24.41 billion during the year 2020-21 and is marching towards the ambitious target of US$ 29 billion set by the Union Commerce Ministry and the Prime Minister’s Office. Now, extending the benefits of RoDTEP scheme to pharma sector is a welcome step. The inclusion of pharma industry under RoDTEP scheme is definitely going to give a boost to the domestic industry and provide a level playing field for the Indian pharmaceutical industry in the international market. The Union Commerce Ministry’s decision to include pharma sector under the RoDTEP scheme will definitely help the domestic pharma exporters, especially the MSMEs, as they can remain competitive in the global market in the wake of rising freight and raw material costs and weakening rupee against the US dollar. This small gesture of inclusion of pharma industry under the RoDTEP scheme by the Union Commerce Ministry will go a long way in boosting the morale of the pharmaceutical industry in the country.
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