The government has slashed the benefits under the scheme that refunds taxes incurred at the production stage of exported goods by half, sparking concern among exporters facing a highly uncertain global trade environment.
“With immediate effect, the applicable Remission of Duties and Taxes on Exported Products (RoDTEP) rates shall be limited to 50% of the existing rates and, where applicable, 50% of the notified value caps,” a notification by the Directorate General of Foreign Trade said.
RoDTEP reimburses taxes, duties and levies at the central, state and local level which are currently not being refunded under any other mechanism but are incurred by the exporters in the process of manufacture and distribution of exported products.
Before Monday notification, refunds ranged from 0.3% to 4.3% of the value of exported products. These rates will now come down to 0.15% to 2.15%. The refunds are given as transferable duty credit scrip which can be used to pay import duties or sold in the market by exporters.
FIEO seeks restoration of benefits
The Federation of Indian Export Organisation (FIEO) has sought restoration of benefits which existed prior to the latest notification and will be approaching the government for it.
Already a government appointed committee is reviewing rates of tax refund under the export schemes RoDTEP and Rebate of State and Central Taxes and Levies (RoSCTL). RoSCTL is applicable on exports of apparel and garments. RoSCTL is set to expire by March 31, 2026. The panel is headed by former secretary Neeraj Kumar Gupta.
A brief history of RoDTEP
The RoDTEP, which was first introduced in 2021, covers exports of 10,642 products. It replaced the Merchandise Exports from India scheme which along with other export promotion schemes were successfully challenged at the World Trade Organization (WTO) by the US
RoDTEP has seen many extensions and modifications since it was first introduced. The current period of extension is expiring on March 31, 2026. It is operated under the budgetary framework so that remissions during the financial year are managed within approved allocation.
The allocation for the scheme has been pegged at Rs 15,728 crore for 2026-27, down from the revised estimates of Rs 19018 crore in 2025-26. To clear the arrears of the scheme Rs 991 crore was provided for 2025-26 and for 2026-27 Rs 5346 crore has been set aside for the purpose.