Govt Slashes RoDTEP Benefits By 50%; Industry Flags Competitive Risks

New Delhi, Feb 24 (KNN) The government has reduced benefits under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme by 50 per cent with immediate effect, according to a notification issued by the Directorate General of Foreign Trade (DGFT) on Monday.

The DGFT said RoDTEP benefits will now be capped at half of the notified rates and value limits. 

The scheme, launched in 2021, refunds embedded central, state and local taxes not otherwise reimbursed to exporters. Existing refund rates range from 0.3 per cent to 3.9 per cent.

The move follows a reduction in the scheme’s FY27 budget allocation to Rs 10,000 crore from Rs 18,232.5 crore in the previous fiscal.

Industry Voices Concern

The Federation of Indian Export Organisations (FIEO) urged the government to reconsider the decision. 

FIEO President S C Ralhan said, “The reduction of rates and the cut in value caps by 50 per cent came at a particularly challenging time when Indian exports are already facing significant global headwinds, including slowing demand, increasing uncertainty and rising protectionism. We request the government to reconsider the decision,” TOI reported.

Global Trade and Research Initiative (GTRI) founder Ajay Srivastava said the reduction would raise export costs by lowering refunds of non-recoverable domestic taxes. 

He noted, “In price-sensitive sectors, even a 1–2 per cent increase in costs can decide whether orders are won or lost. The cut comes when global demand is weak, logistics and compliance costs remain high, and competitors such as Vietnam and Bangladesh still enjoy lower costs and preferential market access,” reported Business Standard.

“Lower remission will make Indian exports harder to price competitively, squeeze already thin margins, and may discourage smaller firms from expanding abroad — potentially slowing export growth at a time when diversification and scale are crucial,” Srivastava added.

Export Data

Government data showed India’s goods exports rose marginally by 0.61 per cent year-on-year to USD 36.56 billion in January 2026, while the trade deficit widened to a three-month high of USD 34.68 billion, driven by higher imports.

(KNN Bureau)