Why in the news?

  • The Government has extended the RoDTEP incentive scheme for exporters till 31st March 2026.

Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme

  • What is it?:
    • The scheme aims to reimburse embedded taxes and duties that are not refunded under any other mechanism, thereby making Indian exports more competitive.
    • It was introduced on 1st January 2021, replacing the MEIS (Merchandise Exports from India Scheme) after WTO compliance issues.
  • Why was it enacted?:
    • Indian exporters faceD hidden, non-refunded taxes such as- Electricity duty, VAT on fuel used in transportation, Mandi tax, stamp duty, and Embedded Central/State levies not covered under GST.
    • WTO ruling (2019) against MEIS (considered a prohibited export subsidy) led to a shift towards WTO-compliant RoDTEP.
  • Key Features:
    • The refunds are issued in the form of transferable electronic scrips / credits held in a digital ledger.
    • The process is digitized: exporters declare the RoDTEP claim in the shipping bill, the claim is processed via customs, and credit scrips are generated via ICEGATE portal.
    • The scrips can be used for paying eligible customs duties, rebates, or even transferred to other importers. 
    • Rates are Notified by the Ministry of Commerce for eligible sectors (generally 0.5%–4.3% of FOB value).
    • Covers 85%+ of tariff lines, including labour-intensive sectors (textiles, leather, gems, agriculture, marine, handicrafts).
  • Implementation Mechanism:
    • Exporter claims refund at the time of shipping bill filing.
    • Customs verifies and credits rebate in electronic ledger.
    • Exporters can use credit for basic customs duty payment or transfer it to another importer.
  • Advantages:
    • Avoids the burden of compounding taxes and hidden taxes on Exporters.
    • Makes Indian exports cost-competitive in global markets.
    • Provides a level playing field vis-à-vis other exporting nations.
    • Improves liquidity for exporters, especially MSMEs.
    • Ensures WTO-compatibility (not a direct subsidy, but tax remission).
  • Challenges:
    • Limited coverage: Certain sectors excluded initially (steel, chemicals, pharma).
    • Low rebate rates: Exporters demand higher rates to match actual embedded taxes.
    • Budget constraints: Allocation often less than industry expectations.
    • Complexity in rate fixation: Lack of transparency in calculation methodology.
  • Way Forward:
    • Expand coverage to all sectors with realistic refund rates.
    • Periodic review of rates and sectors in consultation with exporters.
    • Strengthen digital systems for faster credit issuance.
    • Integrate with broader National Trade Facilitation Action Plan.