Government Restores Remission of Duties and Taxes on Exported Products Effective June 1, 2025

On May 27, 2025, the Government of India announced a significant policy update, reinstating benefits under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme for exports by Advance Authorization (AA) holders, Export-Oriented Units (EOUs), and units in Special Economic Zones (SEZs), effective June 1, 2025. This move is a strategic effort to bolster India’s export competitiveness in global markets, addressing the challenges faced by exporters and fostering a level playing field across sectors. In this article, we’ll explore the RoDTEP scheme, its reinstatement, benefits, eligibility, and its broader implications for Indian exporters, particularly small and medium enterprises (SMEs).

What is the RoDTEP Scheme?

The RoDTEP scheme, launched on January 1, 2021, is designed to reimburse exporters for embedded duties, taxes, and levies that are not refunded under other existing schemes. These include taxes on fuel, electricity, transport, and other inputs that add to production costs but are not covered by schemes like the Goods and Services Tax (GST) refund or Duty Drawback. The scheme replaced the Merchandise Exports from India Scheme (MEIS), which was deemed non-compliant with World Trade Organization (WTO) norms due to its export subsidy structure.

By offering rebates ranging from 0.3% to 4.3% of the Freight on Board (FOB) value of exports, RoDTEP ensures that Indian exporters can compete globally without the burden of unrefunded taxes. The rebates are issued as transferable duty credits or electronic scrips, maintained in a digital ledger by the Central Board of Indirect Taxes and Customs (CBIC), ensuring transparency and efficiency.

Why Was the RoDTEP Scheme Restored?

The RoDTEP benefits for AA holders, EOUs, and SEZ units were previously available until February 5, 2025, but were temporarily suspended, creating disparities among exporters. The reinstatement, effective June 1, 2025, responds to industry demands, particularly from SMEs, which faced pricing challenges due to the suspension. The decision aligns with the government’s broader goal of enhancing India’s export competitiveness, especially in a global market where demand remains uneven and margins are tight.

According to the Ministry of Commerce and Industry, the restoration aims to “provide a level playing field for exporters across sectors” and reflects the government’s commitment to creating a “conducive, competitive, and compliant export ecosystem.” This move is part of sustained efforts to achieve India’s ambitious target of $1 trillion in exports by 2030, with RoDTEP playing a pivotal role in supporting merchandise exports.

Key Features of the RoDTEP Scheme

The RoDTEP scheme is designed to be WTO-compliant, ensuring that India’s export incentives align with international trade regulations. Here are its core features:

• Comprehensive Coverage: The scheme covers a wide range of sectors, including labor-intensive industries like textiles, leather, gems, and jewelry, as well as capital-intensive sectors like electronics, automobiles, and machinery.

• Refund of Embedded Taxes: It reimburses taxes and duties such as VAT, mandi tax, coal cess, and central excise duty on fuel, which are not covered by other schemes.

• Digital Efficiency: Refunds are issued as transferable e-scrips, tracked via an electronic ledger, with an IT-based risk management system ensuring speed and accuracy.

• Budget Allocation: For the fiscal year 2025-26, the government has allocated ₹18,233 crore to support 10,780 HS lines for Domestic Tariff Area (DTA) exports and 10,795 HS lines for AA/EOU/SEZ exports, ensuring broad sectoral coverage.

• Priority for SMEs: Micro, small, and medium enterprises, which contribute about 45% of India’s total exports, benefit significantly, as the scheme helps them price products competitively in global markets.

Who Benefits from the RoDTEP Reinstatement?

The restoration of RoDTEP benefits specifically targets exports by:

1. Advance Authorization (AA) Holders: These exporters can import raw materials duty-free for producing export goods, and RoDTEP ensures they are reimbursed for additional embedded taxes.

2. Export-Oriented Units (EOUs): EOUs, designed to promote exports, benefit from tax refunds, enhancing their ability to compete in international markets.

3. Special Economic Zones (SEZs): SEZ units, which operate under a distinct regulatory framework, gain from the reinstatement, ensuring parity with DTA exporters.

The reinstatement is particularly significant for SMEs, which often operate on thin margins. As noted by Vinod Kumar, President of the India SME Forum, “This is a much-needed relief for the SME export community. The withdrawal of RoDTEP benefits earlier this year had disrupted pricing models for many small and mid-sized exporters.” The restoration allows SMEs to stabilize pricing and commit to long-term contracts, boosting their global competitiveness.

Impact on Indian Exporters

The reinstatement of RoDTEP benefits is expected to have a transformative impact on Indian exporters. Here’s how:

1. Enhanced Global Competitiveness

By refunding embedded taxes, RoDTEP reduces the cost of exported products, allowing Indian exporters to offer competitive prices in international markets. This is critical in sectors like textiles and electronics, where global competition is fierce.

2. Support for SMEs

SMEs, which dominate sectors like textiles, engineering goods, and gems, benefit from financial relief that enables them to compete with larger players. The scheme’s reinstatement ensures they can maintain consistent pricing, crucial for securing long-term contracts.

3. Alignment with WTO Norms

The RoDTEP scheme’s WTO compliance ensures that India avoids trade disputes, such as the one faced by the MEIS scheme when the U.S. challenged it at the WTO. This compliance strengthens India’s position in global trade negotiations.

4. Boost to Merchandise Exports

Since its inception, RoDTEP has disbursed over ₹57,976 crore in benefits by March 31, 2025, supporting India’s merchandise exports. The reinstatement is expected to further drive export growth, particularly in value-added sectors.

5. Support for Diverse Sectors

The scheme’s coverage of 10,780 HS lines for DTA exports and 10,795 HS lines for AA/EOU/SEZ exports ensures that diverse sectors, from agriculture to electronics, benefit, fostering balanced economic growth.

Challenges and Industry Feedback

While the reinstatement has been widely welcomed, some exporters have raised concerns about the temporary suspension of benefits earlier in 2025. Srivastava, an industry expert quoted by Mint, noted, “Exporters, especially SMEs, find it difficult to price products or commit to long-term contracts when they cannot rely on consistent support.” He emphasized the need for uninterrupted RoDTEP coverage for at least five years to build trust and enhance India’s export credibility.

Additionally, certain sectors, such as pharmaceuticals, steel, and chemicals, remain excluded from RoDTEP benefits due to their strong performance during the pandemic or other factors. The government’s rationale is that these sectors are already competitive, but industry stakeholders argue for broader inclusion to ensure uniformity.

Government’s Broader Export Strategy

The RoDTEP reinstatement is part of a larger strategy to boost India’s exports. The government has also launched the Trade Connect e-Platform, which connects Indian exporters with global trade networks, including Indian Missions abroad and the Department of Commerce. This platform provides comprehensive services, from market insights to compliance guidance, further supporting exporters.

The Federation of Indian Export Organisations (FIEO) praised the reinstatement, with President S C Ralhan stating, “This positive step will go a long way in improving the global competitiveness of Indian exporters operating under these key export promotion schemes.” The government’s focus on digital platforms, WTO compliance, and financial incentives underscores its commitment to making India a global export hub.

Looking Ahead: RoDTEP’s Role in India’s Export Growth

The reinstatement of RoDTEP benefits effective June 1, 2025, signals the government’s proactive approach to addressing exporter challenges. By ensuring a level playing field and refunding embedded taxes, the scheme empowers exporters to compete globally while adhering to WTO norms. For SMEs, this is a lifeline that supports pricing stability and market expansion.

As India aims for $1 trillion in exports by 2030, initiatives like RoDTEP, combined with digital platforms and policy stability, will be critical. Exporters are encouraged to leverage the Trade Connect e-Platform and stay updated on RoDTEP guidelines via the Directorate General of Foreign Trade (DGFT) website.

For more details on the RoDTEP scheme and its benefits, visit the official DGFT website or the Ministry of Commerce and Industry portal. Stay informed and seize the opportunities to grow your export business in a competitive global market.

Sources:

• Ministry of Commerce and Industry Statement, May 27, 2025

• The Economic Times, May 26, 2025

• Mint, May 27, 2025

• Zee News, May 27, 2025

• Posts on X, May 27, 2025