Remission of Duties and Taxes on Exported Products (RoDTEP)

Overview

The Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme is a WTO-compliant export incentive mechanism introduced by the Government of India on 1 January 2021, replacing the earlier Merchandise Exports from India Scheme (MEIS). The MEIS was withdrawn after a World Trade Organization (WTO) dispute panel ruled that it constituted prohibited export subsidies under the WTO Agreement on Subsidies and Countervailing Measures (SCM Agreement).

RoDTEP refunds embedded duties and taxes that are levied at central, state, and local levels but are not refunded under any other existing mechanism such as GST input tax credit or duty drawback. The refunds are issued as transferable electronic duty credit scrips (e-scrips), which exporters can use to pay Basic Customs Duty on imports or transfer electronically to another party.

Duties and Taxes Covered

RoDTEP reimburses the following embedded levies that were previously built into the cost of exported goods:

• Central and State excise duty on fuel used for transportation of export goods (petrol, diesel, CNG, PNG, LPG)
• Coal cess or duty levied by States on electricity consumed for manufacturing of export goods
• Mandi tax levied by Agricultural Produce Market Committees (APMCs)
• Toll tax and stamp duties on import-export documentation
• Value Added Tax (VAT) wherever applicable on inputs not covered by GST
• Electricity duty and water charges levied by States
• Municipal taxes and local body levies

Mechanism and How It Works

E-Scrip System

Refunds are issued as transferable electronic duty credit ledger entries (e-scrips) in the exporter’s account on the ICEGATE portal. These scrips can be:

• Used to pay Basic Customs Duty on import of goods
• Transferred electronically to another importer/exporter
• They are NOT disbursed as direct bank credits

Rate Determination

Rates are notified product-wise (at 8-digit HS code level) in Appendix 4R (for DTA exports) and Appendix 4RE (for AA/SEZ/EOU exports) of the Foreign Trade Policy. Rates range from 0.3% to 3.9% of the FOB value, with absolute value caps per unit for many tariff lines.

Sectors Covered

The scheme covers a wide range of export sectors:

• Agriculture and processed food products (ITC HS Chapters 01-24) — exempted from the February 2026 rate cuts
• Textiles and apparel — labour-intensive, priority sector
• Leather and leather products
• Marine products
• Gems and jewellery (certain categories)
• Engineering goods and machinery
• Automobiles and auto components
• Electrical and electronics
• Chemicals and pharmaceuticals — added in December 2022, initially excluded
• Iron and steel — added in December 2022, initially excluded
• Plastics and rubber products

Recent Developments (2025-2026)

February 2026 Rate Reduction

In February 2026, DGFT reduced RoDTEP benefits to 50% of notified rates and value caps for all HS lines under Appendix 4R and 4RE, effective immediately. However, this reduction does not apply to agricultural and processed food products (ITC HS Chapters 01-24).

Budget 2026-27 Allocation Cut

The Union Budget 2026-27 cut the RoDTEP allocation by 45% — from Rs 18,232 crore (FY 2025-26) to Rs 10,000 crore (FY 2026-27). This has raised concerns among export bodies like the Federation of Indian Export Organisations (FIEO).

Restoration Assurance

The Commerce Ministry has assured that full RoDTEP benefits will be restored from 1 April 2026. FIEO confirmed this assurance following industry representations.

Extension to SEZ/EOU/AA Units

In October 2025, the Government extended RoDTEP benefits to exports from SEZ units, EOU units, and Advance Authorisation (AA) holders, valid until 31 March 2026.

WTO Compliance

RoDTEP was specifically designed to be WTO-compliant. Unlike MEIS, which was ruled as a prohibited export subsidy because it rewarded exports with additional incentives, RoDTEP only reimburses actual taxes and duties embedded in the cost of production — it does not provide any extra incentive beyond what was actually paid. This distinction is critical:

• MEIS — gave a percentage of FOB value as an incentive irrespective of actual taxes paid (subsidy)
• RoDTEP — reimburses only verified, embedded, un-refunded taxes (reimbursement, not subsidy)

Latest Developments

• 50% Rate Reduction (February 2026): DGFT restricted RoDTEP benefits to 50% of notified rates and value caps for all HS lines under Appendix 4R and 4RE, effective from 23 February 2026. Agricultural and processed food products (ITC HS Chapters 01-24) are exempt from this reduction.
• Budget 2026-27 — 45% Allocation Cut: The Union Budget 2026-27 slashed RoDTEP allocation to Rs 10,000 crore, down from Rs 18,232 crore in FY 2025-26, raising concerns from export bodies including FIEO (Federation of Indian Export Organisations).
• Full Restoration Assured from April 2026: The Commerce Ministry has assured exporters that full RoDTEP benefits will be restored from 1 April 2026, following industry representations by FIEO.
• Extension to SEZ/EOU/AA Units (October 2025): The Government extended RoDTEP benefits to exports from SEZ units, EOU units, and Advance Authorisation (AA) holders, valid until 31 March 2026.
• Restoration of AA/SEZ/EOU Benefits (June 2025): RoDTEP benefits were formally restored for AA holders, EOUs, and SEZ units for all eligible exports made from 1 June 2025 onwards.
• Scheme Extension to March 2026: DGFT Notification No. 35/2025 (dated 30 September 2025) extended the RoDTEP scheme beyond September 2025, keeping it in force for DTA, AA, SEZ, and EOU exports until 31 March 2026.
• Cumulative Disbursement: Total RoDTEP disbursement has reached approximately Rs 57,977 crore up to March 2025, covering approximately 10,780 tariff lines at the 8-digit HS code level.

Prelims Importance

• RoDTEP replaced MEIS from 1 January 2021 following an adverse WTO ruling against India
• Administered by DGFT under the Department of Commerce, Ministry of Commerce and Industry
• Refunds are issued as transferable e-scrips (electronic duty credit), not bank transfers
• Rates range from 0.3% to 3.9% of FOB value
• Covers approximately 10,780 tariff lines (8-digit HS codes) for DTA exports
• Initially excluded chemicals, pharmaceuticals, and iron & steel — extended to these sectors in December 2022
• Cumulative disbursement: approximately Rs 57,977 crore up to March 2025
• FY 2026-27 budget: Rs 10,000 crore (down from Rs 18,232 crore in FY 2025-26)
• Agriculture and food products (HS Chapters 01-24) are exempt from the February 2026 rate reduction

Mains & Interview Importance

GS Paper 3 — Indian Economy: External Sector, Trade Policy

• Analyse how India’s transition from MEIS to RoDTEP reflects the challenge of balancing export competitiveness with WTO compliance
• Discuss whether embedded tax refund mechanisms are sufficient to address the structural cost disadvantages faced by Indian exporters compared to competing nations like Vietnam and Bangladesh
• Evaluate the impact of budget cuts on labour-intensive export sectors like textiles, leather, and marine products
• Examine the role of export incentives in achieving the $2 trillion export target

Interview Angles

• “India’s WTO disputes have forced a rethink of its export subsidy architecture. Is RoDTEP adequate, or does India need a more comprehensive approach to export competitiveness?”
• “Should India continue with fiscal incentives for exports, or should the focus shift to infrastructure, logistics, and ease of doing business?”
• “How does the 45% budget cut in RoDTEP allocation for FY 2026-27 signal the government’s changing approach to export support?”

Sources: DGFT, PIB, Business Standard, EY India