RoDTEP benefits cut by 50% as govt rationalises export rebate scheme

The government has halved RoDTEP incentives with immediate effect, reducing rebate rates and value caps across categories, a move expected to raise exporters' costs amid global uncertainty

The government has slashed benefits under the Remission of Duties and Taxes on Export Products (RoDTEP) scheme by half with immediate effect.

 

The policy decision is likely to step up costs for exporters amid ongoing global uncertainties, according to an official notification.

 

The Directorate General of Foreign Trade (DGFT) released on Monday said that as a part of the rationalisation exercise, rebate rates and the value caps have been reduced across all product categories. This means that exporters will now get only 50 per cent of the earlier RoDTEP benefits.

 

“RoDTEP benefits shall be restricted to 50 per cent of the notified rates and value caps with immediate effect,” it said.

 

 

The scheme refunds to exporters the embedded non-creditable central, state and local levies paid on inputs. The scheme is based on the principle that taxes should not be exported. These taxes were not refunded earlier.

 

Earlier this year, under the Union Budget, allocation for the commerce department’s key scheme was slashed by 45 per cent to ₹10,000 crore for FY27, Budget documents showed. The government had allocated ₹18,233 crore for the current financial year.

 

A former trade ministry official and founder of Delhi-based think tank GTRI, Ajay Srivastava, said that halving RoDTEP rates will raise the cost of exporting from India by reducing refunds of domestic taxes that exporters cannot otherwise recover.

 

“In price-sensitive sectors, even a 1–2 per cent increase in costs can decide whether orders are won or lost. The cut comes when global demand is weak, logistics and compliance costs remain high, and competitors such as Vietnam and Bangladesh still enjoy lower costs and preferential market access. Lower remission will make Indian exports harder to price competitively, squeeze already thin margins, and may discourage smaller firms from expanding abroad — potentially slowing export growth at a time when diversification and scale are crucial,” he said.