RoDTEP Revision Sparks Export Concerns, Agri Shipments Get Relief

India’s export incentive framework has come under renewed focus following recent revisions to the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, a key mechanism designed to keep Indian goods competitive in global markets. Introduced in January 2021 as a replacement for the Merchandise Exports from India Scheme (MEIS) , RoDTEP was structured to comply with World Trade Organization (WTO) rules by refunding embedded domestic taxes rather than providing direct export subsidies.

At its core, the scheme reimburses exporters for unrefunded duties and levies incurred during manufacturing and logistics. These include electricity duty, mandi tax, fuel levies, stamp duties, and local charges that are not reimbursed through any other central, state or local mechanism. The refunds are issued as transferable electronic scrips , which exporters can use to pay customs duties or sell, thereby improving liquidity.

RoDTEP applies to a broad spectrum of export sectors, particularly manufactured and value-added goods such as engineering products, textiles and garments, leather and footwear, chemicals, plastics, gems and jewellery, handicrafts, marine products, and processed foods. Refund rates typically range from 0.3% to 3.9% of the Free on Board (FOB) value, depending on product classification under the ITC HS code system .

Recent government action to reduce RoDTEP rates and impose value caps triggered concern across export industries. However, the Directorate General of Foreign Trade clarified that the revised rates do not apply to items classified under ITC HS Chapters 01–24 , which include agricultural and processed food products such as cereals, spices, seafood, meat, dairy and ready-to-eat foods. The exemption provides crucial relief to agri exporters, as the sector supports millions of farmers and plays a significant role in foreign exchange earnings.

Exporters in manufacturing sectors remain uneasy, noting that many operate on thin margins of 1–3% , making them highly sensitive to incentive reductions. Industry leaders warn that sudden policy changes can disrupt pricing commitments and weaken buyer confidence, especially amid global trade uncertainties, rising logistics costs and growing protectionist pressures.

Budgetary constraints appear to be a key driver behind the recalibration. While the scheme received ₹18,232 crore for 2025–26 and was proposed to increase to ₹21,709 crore in 2026–27, the interim allocation has been capped at ₹10,000 crore . The Commerce Ministry has reportedly sought enhanced funding, highlighting the challenge of balancing fiscal discipline with export competitiveness.

Despite these pressures, India’s merchandise exports showed modest resilience, rising 0.61% to $36.56 billion in January , though the trade deficit widened to $34.68 billion , reflecting strong import demand and elevated energy costs.

Trade experts note that RoDTEP remains critical for ensuring cost neutrality and global competitiveness , particularly for sectors competing with exporters from Vietnam, Bangladesh and China. As the government reviews funding and rates in the coming months, policy stability and timely refunds will be essential to sustaining exporter confidence and supporting India’s long-term trade growth.