Centre says 'fiscal consolidation' key reason behind slashing exporters' RodTEP scheme benefits

RoDTEP was launched in 2021 as a reimbursement for exporters for taxes which were not refunded through other mechanisms.

• Exporters urge rollback of RoDTEP changes citing loss of margins
• RoDTEP benefits now capped at 50 percent for most sectors
• Agriculture and allied sectors exempt from new RoDTEP limits

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Exporters across sectors are urging the Central government to roll-back the recently notified changes in the RoDTEP scheme, as they say the abrupt change will cause losses on their current orders and decrease competitiveness of their exports.

Government officials privy to the matter say the restructuring of RoDTEP is a part "fiscal rationalisation" of the scheme. However, any roll-back of the newly announced measures is not under consideration at the moment, they say.

The Directorate General of Foreign Trade (DGFT) on February 23 notified that “RoDTEP benefits shall be restricted to 50 percent of the notified rates and value caps with immediate effect,” triggering calls for reconsideration from export bodies.

RoDTEP was launched in 2021 as a reimbursement for exporters for taxes which were not refunded through other mechanisms. It had replaced the Merchandise Exports from India Scheme (MEIS) to align with WTO norms.

"We have already booked the tax rebates we get under RoDTEP in our accounts for our recent orders, now our margins will be affected," Avinash Gupta, Director, RN Gupta and Company Ltd told Moneycontrol. The company is an exporter of forged machine parts.

Sarvadnya Kulkarni, CEO, General Instruments Consortium--an exporter of engineering goods--said: "The reduction in RoDTEP rates directly affects cost competitiveness, especially for precision manufacturing exporters operating on tight margins."

"In sectors like industrial instrumentation and engineered equipment, even a small reduction impacts pricing in global tenders where we compete with China and Southeast Asia," Kulkarni told Moneycontrol.

The tightening of benefits under RoDTEP coincides with a sharp budgetary contraction. Allocation for the scheme was reduced by 45 percent to Rs 10,000 crore in FY27, compared with Rs 18,233 crore in FY26.

Essentially, RoDTEP scheme offers a refund to exporters, which is calculated based on the FOB (Free on Board) Value of the export -- the price of the goods when they reach the ship, before insurance and freight are added.

For instance, If the FOB value any product, say cotton, is Rs 100,000, a refund of Rs 3,000 - 3,900 was being given under the RoDTEP. Now this will be reduced to about Rs 1,500.

The government has, however, clarified that while RoDTEP benefits would be capped at 50 percent of existing notified rates and value limits across industries, agriculture and allied sectors would be kept outside the new restriction.