Indian Exporters Concerned by Halved RoDTEP Benefit
Indian exporters are raising alarms after the government's RoDTEP (Remission of Duties and Taxes on Export Products) benefit was cut by half. Industry groups are pushing for an immediate review of the policy change. The reduction could impact the net margins and pricing flexibility for Indian SaaS companies and other businesses targeting global markets.
- The Remission of Duties and Taxes on Exported Products (RoDTEP) scheme was launched on January 1, 2021, to replace the previous Merchandise Exports from India Scheme (MEIS). It is designed to be compliant with World Trade Organization (WTO) rules by refunding embedded central, state, and local taxes that are not otherwise credited, making Indian exports more competitive globally. - The Directorate General of Foreign Trade (DGFT) has reduced the benefits under this scheme by 50% with immediate effect, a move that applies to both the notified rates and the value caps across most product categories. - This "rationalisation" follows a significant cut in the scheme's budget allocation, which was lowered to ₹10,000 crore for fiscal year 2026-27, down from ₹18,232.50 crore in the previous fiscal year. - The benefit is issued to exporters in the form of transferable electronic scrips, which can be used to pay customs duties or can be sold to other importers, thus enhancing liquidity for the exporting firm. - Industry leaders argue that this change will increase the cost of exporting from India and squeeze already thin margins, as even a 1-2% cost disadvantage can result in losing orders to competitors in countries like Vietnam and Bangladesh. - The rate cut affects a broad range of manufacturing sectors, including textiles, engineering goods, chemicals, and plastics. However, the revised rates do not apply to agricultural and processed food products, providing relief to agri-exporters. - The Federation of Indian Export Organisations (FIEO) and other trade groups have voiced serious concern over the suddenness of the policy change, highlighting that it comes amid global headwinds like slowing demand and rising protectionism, and have urged the government to review the decision.
