Tea, coffee exports find the RoDTEP rates inadequate.

Exports of tea and coffee, the two main beverages exported from India, are finding the rates announced under RoDTEP (Remission of Duties and Taxes on Exported Products) inadequate in the face of uncertainty in exports which has increased as the pandemic hit key export markets like Iran, Egypt, Russia, USA, UAE and UK, where the cafes and tea lounges and boutiques are yet to open up fully.

They have urged the ministries of commerce and finance to increase the RoDTEP rate so that they can get some respite.

The government implemented the RoDTEP scheme with effect from January 2021. After missing several deadlines, the commerce ministry notified the guidelines and rates under the scheme on August 17 this year. The new remission rates announced under the scheme envisage exporters to be compensated the embedded taxes, which were not recoverable (or refunded) and inbuilt in the price of the export commodity, leading to intense competition in the international market.

In case of tea and coffee, RoDTEP benefit rate has been fixed @ 1% to 1.7% (cap of Rs 3.6 per kg) of freight on board (FoB).

Talking to ET, Sujit Patra, secretary, Indian Tea Association, said “A report submitted to ministry of commerce and ministry of finance finds 6.3 per cent the quantum of embedded government duties imposed on tea. Working capital cycle of exporters is elongated owing to various factors. Uncertainty in tea exports has grown by leaps and bounds as covid pandemic has hit the key export markets like Iran, Egypt, Russia, USA, UAE, UK among others.”

The ITA executive added that at a time when tea exports are continuously decreasing, 1% remission is far from reality. This is disappointing. In the last one year, ocean freight has increased by almost 500%, and internal transport cost has gone up substantially.

“So, unless the government comes forward and increases the RoDTEP rate, Indian tea will remain uncompetitive in the global market. Tea industry should be given at least 6% of FoB as RoDTEP benefit,” Patra added.

Export of tea, which stood at 256 million kg in 2018, has gradually dwindled to 208 million kg in 2020. And in the first five months of 2021 (January-May), Indian tea exportds logged less by 5 million kg from 71 million kg in the same period last year.

A senior executive of United Planters' Association of Southern India (UPASI) said they are disappointed with the RoDTEP rates of coffee. “It should be increased to 5 per cent and 7 per cent for value-added products,” he added.