The government on Tuesday restored full benefits of its flagship export promotion scheme Remission of Duties and Taxes on Exported Products (RoDTEP) that is designed to refund taxes incurred while producing for exports to agriculture and processed food items.
The change came a day after the Directorate General of Foreign Trade (DGFT) slashed the rate of tax refund on exported products to half under the RoDTEP. The reduction in benefit is due to the lower allocation for the scheme in the budget for the financial year 2026-27.
The scheme is operated within a budgetary framework which means that the benefits should be managed within the allocated budget.
Allocation for FY26-27
For 2026-27 the allocation for the scheme is Rs 15,728 crore, of which Rs 5,346 crore is for clearing past dues. So effectively just around Rs 10,382 crore is available next year for benefits. For this financial year Rs 19,080 crore has been earmarked for the scheme in the revised estimates of which Rs 991 crore is for paying the arrears.
The Commerce Ministry had sought Rs 21,729 crore for the scheme in 2026-27. Now a fresh note has been sent by the ministry to the Department of Expenditure for increasing the allocation.
Before Monday notification, refunds ranged from 0.3% to 4.3% of the value of exported products. These rates will now come down to 0.15% to 2.15%. The refunds are given as transferable duty credit scrip which can be used to pay import duties or sold in the market by exporters.
What did DGFT say?
“Central Government hereby notifies that the reduced rates and value caps notified for the RoDTEP Scheme would not be applicable to the export falling under ITC HS Chapter 1 to 24,” a DGFT notification said Tuesday.
Chapters 1 to 24 of the Harmonized System of Nomenclature (HSN Code) are categorized into four major sections covering live animals, vegetable products, and processed foodstuffs.
The reduction in benefits has come as a sudden blow to exporters who are facing a highly uncertain global trade environment. The Federation of Indian Export Organisations (FIEO) has sought restoration of benefits that existed earlier otherwise competitiveness of Indian products would be eroded.
Due to the cut in benefits shares of major textile exporters saw up to 6% decline in Tuesday’s trade.
The RoDTEP, which was first introduced in 2021, covers exports of 10,642 products. The products exempted from cuts would account for 20% of the list of goods eligible. RoDTEP has seen many extensions and modifications since it was first introduced in 2021. The current period of extension is expiring on March 31, 2026.
Source from: https://www.financialexpress.com/business/news/export-benefits-for-agri-sector-restored-after-a-day/4153534/
