By Agneshwar Sen
The world of international trade is becoming increasingly fragmented and protectionist. Countries are recalibrating their trade policies, often in the name of national interest, sustainability, and economic resilience. The United States of America has termed national trade deficits as a ‘National Emergency’ and declared reciprocal tariffs and countervailing measures against various countries. China has imposed export licensing controls on strategic materials like rare earth elements, disrupting critical supply chains. The European Union is set to implement the Carbon Border Adjustment Mechanism (CBAM), which will tax carbon-intensive imports, including those from India.
In this context, it is imperative for India to strengthen its trade policies supporting the exporting community by zero-rating exports in terms of taxes and duties imposed. India has diligently recognised its obligations to move away from subsidy-led exports, as agreed upon at the World Trade Organization (WTO). It must now devise policies that fully encourage domestic value creation and manufacturing by creating a globally competitive environment.
From MEIS to RoDTEP: A Policy Reorientation
India’s export incentive regime has undergone a strategic overhaul. The Merchandise Exports from India Scheme (MEIS), introduced in 2015, was designed to offset infrastructural inefficiencies and reduce costs for exporters through the grant of duty credit scrips. These scrips, calculated on the FOB value of exports, could be used to pay Customs duty.
However, in 2018, the United States of America challenged MEIS at the WTO, citing it as a prohibited subsidy under the Agreement on Subsidies and Countervailing Measures (SCM). The WTO ruled against MEIS, leading to its phase-out in 2020 and laying the foundation for a WTO-compliant scheme—RoDTEP (Remission of Duties and Taxes on Exported Products).
The erstwhile MEIS Scheme offered upfront incentives on the FOB value of exports, whereas the RoDTEP Scheme was launched in January 2021, with the objective of refunding actual non-creditable/non-cenvatable Central and State duties, taxes, and levies that exporters incur in the manufacturing and export of products.
RoDTEP covers more than 10,780 tariff lines and extends across key sectors such as Agriculture, Chemicals, Engineering Goods, Automobiles, and Electrical Equipment. Its role is not only to reduce exporters' financial burden but also to ensure that India complies with international trade norms, thereby avoiding any further disputes at the WTO.
Financial Commitment and Strategic Intent
The RoDTEP Scheme is backed by significant budgetary support. The Government of India has allocated ₹18,233 crore for FY 2025–26; however, the total disbursement under the RoDTEP Scheme has been approximately ₹57,976 crore since its inception. This reflects a strong commitment towards supporting exporters in a manner that is sustainable and globally compliant.
At a strategic level, the scheme strengthens flagship initiatives like Make in India and Atmanirbhar Bharat by making Indian manufacturing cost-competitive on the global stage. It ensures that incentives are not viewed as market-distorting subsidies but as justifiable tax/duty remissions.
ARR: Raising the Bar on Export Compliance
In October 2024, the Government introduced the Annual RoDTEP Return (ARR), marking a critical shift towards stricter compliance and better audit trails. Exporters now need to file detailed ARR aligned with their RoDTEP claims.
These returns must be filed by 31 March of the following financial year and must include transaction-level details at the 8-digit HS code level. Separate returns are required for various export categories—EOU/SEZ/AA and DTA exports. Filing becomes mandatory for any exporter whose RoDTEP claim exceeds ₹1 crore under a single Importer Exporter Code (IEC) in the financial year. Failure to comply can result in suspension of the scroll generation facility, effectively preventing any future claims, along with provisions for levying a composition fee for late filing of returns.
Global Trade Tensions and the Need for Self-Reliance
India’s policy shift comes at a time when global trade is facing turbulence. The enforcement of the International Emergency Economic Powers Act (IEEPA) by the U.S.A and export controls on rare earth elements by China are driving a resurgence of global protectionism. With trade instruments increasingly being used to influence geopolitical outcomes, the importance of self-reliance and resilient supply chains has become paramount. India must view RoDTEP and similar frameworks not as standalone schemes, but as part of a broader trade strategy. Domestic capabilities, cost-efficiency, and international credibility now form the tripod of long-term export success.
Going forward, India must make RoDTEP permanent and more responsive to industry needs both in terms of content and procedures. This includes regularly reviewing RoDTEP rates to cover all indirect taxes and costs. The scheme must be expanded to cover all products exported from India. In this age of data-driven governance and regulatory scrutiny, exporters must be aided by creating and adopting digital tools that reduce paperwork and excessive reporting requirements.
-- Shiv Ashish, Tax Professional, EY India also contributed to the article.
(Agneshwar Sen, Trade Policy Leader, EY India.)
Views are personal and do not represent the stand of this publication.
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