The RoDTEP Scheme: Strengthening India's Export Competitiveness

The Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme is a cornerstone of India’s export strategy, introduced in January 2021 to replace the Merchandise Exports from India Scheme (MEIS). This scheme aims to reimburse exporters for various embedded taxes and duties that were previously unrecovered, ensuring India’s export products remain competitive in global markets. With the ever-changing international trade landscape, the RoDTEP scheme has recently seen important updates, enhancing its scope and impact.

Why the RoDTEP Scheme is Critical

Before RoDTEP, many taxes levied during the production process—such as on fuel, electricity, transportation, and central/state duties—were not refunded, which inflated the final cost of Indian goods in international markets. RoDTEP was introduced to solve this issue by refunding these taxes to exporters, making Indian products more cost-competitive. Moreover, the shift from MEIS to RoDTEP was necessary to comply with World Trade Organization (WTO) regulations, following a legal challenge to MEIS as an export subsidy​.

Recent Updates: Expanding the RoDTEP Scheme’s Coverage

In 2024, the Indian government announced major expansions to the RoDTEP scheme. Key changes include:

• Annual RoDTEP Return Requirements: Exporters claiming RODTEP benefits must file an Annual RODTEP Return (ARR) by 31st March of the following financial year if claims exceed ₹1 crore. Non-filing leads to denial of benefits, with late fees applicable. Records must be kept for five years, and some filings may be scrutinised. Non-compliance may result in benefit suspension or refunds.

• Extension to New Export Sectors: The government has extended RoDTEP benefits to export units in the Advance Authorisation (AA) scheme, Export Oriented Units (EOUs), and Special Economic Zones (SEZs). These sectors account for 25% of India's total exports, and their inclusion in RoDTEP is expected to mitigate the impact of global economic challenges and supply chain disruptions​.

• Increased Budget Allocation: For FY 2023-24, the scheme was allocated a budget of ₹15,070 crore, with an additional 10% increase projected for FY 2024-25. This move reflects the government’s commitment to bolstering India’s exports by providing more financial support to key industries​.

• Inclusion of New Product Categories: Over the last few years, the list of eligible products under RoDTEP has expanded. Recent inclusions cover sectors like chemicals, pharmaceuticals, iron and steel, and textiles, aiming to ensure broader participation from industries crucial to India’s export portfolio​.

• Revised Rebate Structure: In addition to expanding the list of sectors, the government has updated the rebate structure. RoDTEP now offers a fixed rebate rate or a fixed quantum per unit of exported product, depending on the item. These rates are determined as a percentage of the Free on Board (FOB) value and vary across industries​. 

This adjustment is expected to provide more tailored support to different sectors, ensuring that the rebate matches the embedded costs more accurately.

The Benefits for Indian Exporters

The primary advantage of RoDTEP is the reduction of input costs for exporters, enabling them to offer more competitive pricing in global markets. Industries like textiles, engineering, chemicals, pharmaceuticals, and food processing have particularly benefited from this support​. With lower production costs, these sectors can scale up operations, increasing both profitability and employment opportunities, which is aligned with the government’s broader vision of Aatmanirbhar Bharat (Self-reliant India).

Additionally, the scheme has helped maintain India's export growth in the face of global economic uncertainties, particularly during disruptions caused by the COVID-19 pandemic. By providing much-needed relief to exporters, RoDTEP has played a role in stabilising the Indian economy through trade.

Key Challenges and Criticisms

Despite its many advantages, RoDTEP has faced some criticism. For one, several exporters have raised concerns about the rates of remission, which they feel do not fully cover the embedded costs, particularly in high-value-added sectors like electronics and automobiles. Additionally, the exclusion of certain export categories continues to be a point of contention, with industry stakeholders advocating for broader inclusion.

The complexity of the rebate claim process has also been a challenge, particularly for smaller exporters who often lack the resources to navigate the procedural hurdles. This has led to calls for simplifying the process to ensure that all eligible exporters, regardless of size, can benefit from the scheme.

A Future Outlook

Looking ahead, the RoDTEP scheme is poised to play an even more significant role in India’s export landscape. The government’s focus on negotiating Free Trade Agreements (FTAs) with key markets like the EU and the UK, combined with the enhancements in RoDTEP, could drive India toward achieving its ambitious goal of $1 trillion in merchandise exports​.

As global trade patterns continue to evolve, the RoDTEP scheme is expected to undergo further revisions and refinements. The government has committed to reviewing the remission rates annually, ensuring that the scheme remains responsive to the needs of exporters while staying within budgetary constraints​.

CONCLUSION

The RoDTEP scheme is not just a refund mechanism but a vital tool in enhancing India's global trade competitiveness. With recent expansions to new sectors and a more inclusive rebate structure, the scheme is set to help Indian exporters navigate the complex challenges of international markets. By reducing the cost of production and encouraging broader participation, RoDTEP is helping to build a robust export ecosystem, driving India toward greater economic self-reliance and global trade leadership.