Remission Of Duties And Taxes On Exported Products (RoDTEP) Scheme, 2021: 2026 Update On Export Incentives And Trade Competitiveness

Policy Update
Aditya Chavan

Background

Exporters compete on price, and part of that price is made up of domestic taxes that no other mechanism returns to them. The Remission of Duties and Taxes on Exported Products (RoDTEP) scheme was designed to close this gap. The Cabinet approved it on 13 March 2020 to reimburse taxes and levies that are not refunded under other mechanisms, such as fuel VAT, mandi tax and electricity duty (Press Information Bureau, 2020), and it has been operational since 1 January 2021 (Press Information Bureau, 2025b). Under the Foreign Trade Policy, the Department of Commerce notifies the scheme’s sectors and benefit levels in consultation with the Department of Revenue, and the rates are published on the portal of the Directorate General of Foreign Trade (DGFT) (Directorate General of Foreign Trade, 2026).

RoDTEP replaced the Merchandise Exports from India Scheme (MEIS) in phases. Once RoDTEP rates were announced for a tariff line, MEIS benefits on that line were discontinued (Press Information Bureau, 2020). The Government describes RoDTEP as compliant with World Trade Organization (WTO) norms and run on an end-to-end digital platform (Press Information Bureau, 2020, 2025b).

Its scale is considerable. Cumulative disbursements crossed Rs 57,976.78 crore by 31 March 2025, and Rs 18,233 crore was allocated for 2025–26, covering 10,780 Harmonised System (HS) lines for Domestic Tariff Area (DTA) exports and 10,795 lines for exports by Advance Authorisation (AA) holders, Export Oriented Units (EOUs) and Special Economic Zone (SEZ) units (Press Information Bureau, 2025b). This article looks at where the scheme stands in 2026, a year in which its rates were halved, restored and then extended while exporters dealt with external shocks.

Functioning & Methodology

RoDTEP pays a rebate at a notified percentage of the free-on-board (FOB) value of an export, with a per-unit value cap where needed. Rates and caps are published in two schedules, Appendix 4R, which lists the rates for ordinary exports from the Domestic Tariff Area (the part of India outside special zones), and Appendix 4RE, which lists the rates for three special categories of exporter: Advance Authorisation (AA) holders, who import inputs duty-free to make export goods; Export Oriented Units (EOUs), which export all of their output; and units in Special Economic Zones (SEZs), which are duty-free enclaves set up for export production (Directorate General of Foreign Trade, 2026, n.d.) . The rebate is issued as a transferable duty credit, or electronic scrip, held in an electronic ledger maintained by the Central Board of Indirect Taxes and Customs, and it can be used only to pay basic customs duty (Directorate General of Foreign Trade, 2026).

The scheme is run through notifications rather than legislation. The Foreign Trade Policy says that rates are to be reviewed annually and notified before the financial year begins (Directorate General of Foreign Trade, 2026). Changes and extensions are issued as DGFT notifications, such as No. 60/2025–26 of 23 February 2026 and No. 41/2026–27 of 30 September 2026 (Press Information Bureau, 2026b, 2026c). This allows the Government to change rates, coverage and duration quickly, a flexibility that, as the 2026 record shows, cuts both ways.

Funding follows the Budget. The scheme operates within an annual budget finalised by the Ministry of Finance with the Department of Commerce. Benefits are adjusted so that projected remissions stay within it, and arrears cannot be carried into the next year (Directorate General of Foreign Trade, 2026). This is the formal link between the allocation and the rates, and the 2026 episode described below puts it to the test.

Key Findings

Table 1 sets out the main decisions that shaped RoDTEP in 2025 and 2026.

Table 1

Key RoDTEP Decisions, 2025–2026

Date	Notification	Change
5 Feb 2025; 1 Jun 2025	Government announcement	Benefits for AA, EOU and SEZ exports, available until 5 February 2025, reinstated for exports from 1 June 2025 (Press Information Bureau, 2025b).
Until 31 Mar 2026	DGFT notification	Scheme extended for DTA, AA, SEZ and EOU exports until 31 March 2026 (Directorate General of Foreign Trade, n.d.).
23 Feb 2026	No. 60/2025–26	Rates and value caps restricted to 50 per cent; a corrigendum followed on 24 February (Press Information Bureau, 2026c).
23 Mar 2026	Superseding notification	Rates and value caps in force on 22 February restored for all eligible products (Press Information Bureau, 2026c).
30 Sep 2026	No. 41/2026–27	Scheme extended until 31 December 2026 (Press Information Bureau, 2026b).

Source: Compiled by the author from the Press Information Bureau and Directorate General of Foreign Trade documents cited in the table.

On 23 February 2026, Notification No. 60/2025–26 restricted RoDTEP rates and value caps to 50 per cent of their notified levels, and a corrigendum followed the next day (Press Information Bureau, 2026c). The restriction lasted one month. On 23 March the Government restored the rates and value caps in force on 22 February for all eligible export products, withdrawing the 50 per cent limit (Press Information Bureau, 2026c). The Ministry of Commerce and Industry gave the disruption of maritime logistics in West Asia as the reason. It said that changed shipping routes had raised logistics costs and affected shipping schedules, and that the step was meant to support exporters facing higher freight costs and war-related trade risks in the Gulf and wider West Asia maritime corridor (Press Information Bureau, 2026c). On 30 September the scheme was extended until 31 December 2026 (Press Information Bureau, 2026b).

Figure 1

Share of Notified RoDTEP Rates and Value Caps in Force, 2026

Source: Press Information Bureau (2026b, 2026c).

The scheme operates against a trade backdrop that is growing but uneven. India’s exports of merchandise and services in 2025–26 were estimated at US$ 860.09 billion, against US$ 825.26 billion in the previous year, a rise of 4.22 per cent. Merchandise exports grew by 0.93 per cent and services exports by 7.94 per cent (Press Information Bureau, 2026a). The Ministry of Commerce and Industry later reported a record US$ 863.1 billion for the year, made up of US$ 441.8 billion in merchandise and US$ 421.3 billion in services (Press Information Bureau, 2026d). In February 2026, India and the United States also announced a framework for an interim trade agreement, under which the United States would apply a reciprocal tariff of 18 per cent on originating Indian goods, subject to the agreement being concluded (Press Information Bureau, 2026e). RoDTEP applies to exported products, so the merchandise line is the one it can bear on, but these figures do not isolate its contribution, and the official sources reviewed here do not publish an estimate of it.

Figure 2

India’s Exports of Merchandise and Services, 2024–25 and 2025–26

Source: Press Information Bureau (2026a). Figures for 2025–26 are estimates.

Policy Significance

RoDTEP rests on the principle that domestic taxes should not be exported along with the product. The Cabinet note presented it as a step towards zero-rating exports alongside existing refunds such as duty drawback and IGST, with the aims of making Indian exports more price-competitive, creating a level playing field for exporters and supporting employment in export-oriented sectors (Press Information Bureau, 2020). By returning levies that no other mechanism refunds, it lets Indian goods compete abroad on their underlying cost rather than on their tax burden.

RoDTEP is one part of a wider export-support architecture. The Export Promotion Mission, approved by the Union Cabinet with an outlay of Rs 25,060 crore for 2025–26 to 2030–31, consolidates schemes such as the Interest Equalisation Scheme and the Market Access Initiative, and targets constraints such as costly trade finance, high compliance costs, fragmented market access and logistical disadvantages (Press Information Bureau, 2025a). The two instruments address different problems: RoDTEP deals with embedded tax cost, while the Mission deals with finance, compliance and market access.

Predictability matters as much as the rate itself. The Foreign Trade Policy envisages annual review and notification before the financial year begins (Directorate General of Foreign Trade, 2026), yet the record for 2025 and 2026 shows benefits that lapsed, were cut within the year and were extended in short steps (Press Information Bureau, 2025b, 2026b, 2026c). For exporters who price orders ahead of shipment, a rate that can change with immediate effect is harder to build into a quote. This is the author’s inference; the official sources reviewed do not measure the effect on exporters’ pricing.

Emerging Issues

The first issue is predictability. RoDTEP benefits for AA, EOU and SEZ exports lapsed after 5 February 2025 and were reinstated only from 1 June 2025 (Press Information Bureau, 2025b). In 2026, rates were halved on 23 February and restored a month later, and the scheme has since been extended to the end of the year (Press Information Bureau, 2026b, 2026c). The policy’s own standard is annual notification before the year begins (Directorate General of Foreign Trade, 2026), and the in-year changes depart from it.

The second issue is funding. The scheme must stay within an annual budget, and benefits are adjusted to fit it (Directorate General of Foreign Trade, 2026). The only allocation figure in the official releases reviewed is Rs 18,233 crore for 2025–26 (Press Information Bureau, 2025b), and this article does not rely on a 2026–27 figure because none could be traced in an official budget document. The notifications and releases reviewed do not state the allocation against which the February rates or the March restoration were set, so the reasoning behind the halving and its reversal cannot be tested against the budget. If outgo exceeds the allocation, the adjustment may again fall on rates, coverage or the speed of disbursement.

The third issue is evidence. Disbursement figures show how much has been paid, not whether competitiveness has improved. Cumulative payouts passed Rs 57,976.78 crore by March 2025 (Press Information Bureau, 2025b). The Foreign Trade Policy provides for monitoring, audit and an output–outcome framework for the scheme (Directorate General of Foreign Trade, 2026), but the official sources reviewed here report no results from it and no estimate of how far RoDTEP has offset embedded taxes or lifted export performance. Without one, rate decisions are hard to justify on competitiveness grounds, in either direction.

Finally, announcements and rates are published in different places. The March release restoring rates describes the change but does not list the rates or value caps, which sit in the linked notification and in Appendices 4R and 4RE (Press Information Bureau, 2026c; Directorate General of Foreign Trade, n.d.). An exporter has to read across several documents to know the rate that applies to a product line on a given date.

Way Forward

The findings point to a set of steps that would make RoDTEP more predictable and easier to evaluate. These are the author’s recommendations drawn from the evidence above.

1. Notify rates for a full financial year. The Foreign Trade Policy already provides for annual review and notification before the year begins (Directorate General of Foreign Trade, 2026). Holding to that schedule, and avoiding mid-year changes with immediate effect, would let exporters price contracts with confidence.

2. Align the allocation and the rates before the year begins. Because benefits are adjusted to fit the annual budget (Directorate General of Foreign Trade, 2026), the Department of Commerce could state the allocation that a set of rates is calibrated to when it notifies them, and give notice of any adjustment that covers orders already booked.

3. Define in advance when emergency changes apply. The 2026 episode showed that rates may need to move with shocks such as high freight costs (Press Information Bureau, 2026c). Objective triggers for temporary changes, and a clear route back to normal rates, would make such responses more predictable than the cut-and-reverse sequence of February and March.

4. Publish disbursement data by sector and year. Annual figures on payouts, claims and coverage would show where the money goes and allow the allocation to be checked against demand.

5. Report the results of the output–outcome framework. The Foreign Trade Policy provides for one (Directorate General of Foreign Trade, 2026); publishing its findings, or commissioning an independent evaluation of how far RoDTEP offsets the embedded taxes exporters bear, would give future rate decisions an evidence base.

6. State the rates in the announcement. Releases that change or restore rates could carry the revised rates and value caps, or a direct link to the schedule, so that exporters can see what applies without reading several documents.

Taken together, these steps point to one priority: making RoDTEP a predictable, evidence-backed instrument rather than a scheme whose value is renegotiated every few months.

References

Directorate General of Foreign Trade. (n.d.). RoDTEP [Web page]. Ministry of Commerce and Industry, Government of India. Retrieved October 10, 2026.https://www.dgft.gov.in/CP/?opt=RoDTEP

Directorate General of Foreign Trade. (2026). Foreign Trade Policy 2023: Chapter 4, Duty exemption/remission schemes [Policy document]. Ministry of Commerce and Industry, Government of India.https://content.dgft.gov.in/Website/FTP2023_Chapter04+dated+20.04.2026-2.pdf

Press Information Bureau. (2020, March 13). Cabinet approves scheme for “Remission of Duties and Taxes on Exported Products (RoDTEP)” to boost exports [Press release]. Government of India.https://www.pib.gov.in/newsite/PrintRelease.aspx?relid=200197

Press Information Bureau. (2025a, November 12). Cabinet approves Export Promotion Mission to strengthen India’s export ecosystem with an outlay of Rs.25,060 crore [Press release]. Government of India.https://www.pib.gov.in/PressReleasePage.aspx?PRID=2189383&reg=3&lang=2

Press Information Bureau. (2025b, May 27). Government restores RoDTEP benefits for AA, SEZ, and EOU exports [Press release]. Ministry of Commerce & Industry, Government of India.https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=2131526&reg=48&lang=2

Press Information Bureau. (2026a, April 15). The cumulative exports (merchandise & services) during FY 2025-26 (April-March) is estimated at US$ 860.09 Billion, as compared to US$ 825.26 Billion in FY 2024-25 (April-March), an estimated growth of 4.22% [Press release]. Ministry of Commerce & Industry, Government of India.https://www.pib.gov.in/PressReleasePage.aspx?PRID=2252272&reg=3&lang=1

Press Information Bureau. (2026b). Government extends Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme upto 31st December 2026 [Press release]. Department of Commerce, Government of India.https://www.pib.gov.in/PressReleaseDetail.aspx?PRID=2318052&reg=3&lang=1

Press Information Bureau. (2026c, March 23). Government restores RoDTEP rates and value caps to support exporters amid West Asia trade disruptions [Press release]. Ministry of Commerce & Industry, Government of India.https://www.pib.gov.in/PressReleasePage.aspx?PRID=2244147&reg=3&lang=1

Press Information Bureau. (2026d, July 28). India’s exports scale record US$ 863.1 billion in FY 2025–26, driven by strong trade with UAE, UK and Australia [Press release]. Ministry of Commerce & Industry, Government of India.https://www.pib.gov.in/PressReleasePage.aspx?PRID=2290437&reg=48&lang=1

Press Information Bureau. (2026e, February 7). United States-India joint statement [Press release]. Ministry of Commerce & Industry, Government of India.https://www.pib.gov.in/PressReleasePage.aspx?PRID=2224783&reg=3&lang=2

About the Contributor

Aditya Chavan is an Economics undergraduate at Symbiosis School of Economics, Pune, with research interests spanning public policy, MSME development, financial inclusion, and economic governance. His work focuses on analysing government policies and institutional reforms aimed at fostering inclusive and sustainable economic development.

Acknowledgement

The author is grateful to IMPRI – Impact and Policy Research Institute for the opportunity to prepare this policy update, and acknowledges the guidance and feedback received during the review process, which helped strengthen the quality of this article.