India is facing countervailing duty (CVD) actions from the United States and the European Union on at least two products due to their utilization of the Remission of Duties or Taxes on Export Products (RODTEP) scheme.
RODTEP, introduced by the Indian government to replace the Merchandise Export Incentive Scheme (MEIS), aims to refund levies on exported goods. However, the US and EU contend that this scheme does not align with the rules prescribed by the World Trade Organization (WTO).
Last month, the US imposed CVD on Indian file folders, rejecting arguments from the Indian government regarding the WTO compliance of RODTEP. Several months earlier, the EU similarly concluded that certain graphite electrode systems from India were subsidized through RODTEP, leading to the imposition of countervailing duties.
While the monetary impact of these levies may not be substantial, trade experts emphasize the need for India to be prepared for a more extensive battle. The government asserts that RODTEP is WTO-compliant, allowing tax-free exports. However, the US and EU have taken a firm stance against this assertion.
Mukesh Bhatnagar, a former professor at the Centre for WTO Studies, advocates for a proactive approach, saying that India cannot afford to lose this battle. He suggests presenting detailed calculations of taxes embedded in exported products, such as fuel taxes, electricity duty, and mandi tax, to support the WTO compliance of RODTEP.
“We will have to take up this issue bilaterally with the US and EU… We may also have to explore our options to take up this issue as a formal WTO dispute,” Bhatnagar said.
As India navigates these challenges, the outcome of these countervailing duty cases could have broader implications for the acceptance and implementation of the RODTEP scheme on the global trade stage.
