Finance Minister Nirmala Sitharaman had announced about the scheme for remission of duties and taxes on export products (RoDTEP) in her Budget speech on February 1.
She had stated that the scheme will be launched from this year itself.
The scheme is to incentivise exporters at an estimated cost of Rs 50,000 crore to the exchequer.
It is proposed to digitally refund to exporters, duties and taxes levied at the centre, state, and local levels, Sitharaman had said while presenting the Union Budget for 2020-21.
These taxes include value added tax (VAT), electricity duties and fuel used for transportation, which are not getting exempted or refunded under any other existing mechanism.
The move assumes significance as a WTO dispute resolution panel has ruled that Merchandise Export from India Scheme (MEIS) was not in compliance with global trade rules.
Under the World Trade Organisation (WTO) rules, certain duties like state taxes on power, oil, water, and education cess are allowed to be refunded.
The country's exports contracted for the sixth month in a row by 1.66 per cent in January to USD 25.97 billion.
During April-January 2019-20, exports slipped 1.93 per cent to USD 265.26 billion, while imports declined 8.12 per cent to USD 398.53 billion, leaving a trade deficit of USD 133.27 billion. RR RVK