India has reduced the benefits available to exporters under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme by 50 per cent, a move that is expected to impact operating margins across sectors. In a recent notification, the government said that RoDTEP benefits will now be limited to half of the earlier notified rates and value caps with immediate effect.

RoDTEP is designed to refund various duties, taxes and levies paid at the central, state and local levels on exported goods. It covers 8,555 tariff lines, with rebate rates ranging from 0.01 per cent for some gems and jewellery items to 4.3 per cent for woven fabrics. Following the revision, both the rebate rates and the maximum value caps have been reduced by half. For example, the rebate on unginned raw cotton of staple length up to 20 mm has been cut from 3.1 per cent (capped at Rs 1.60 per kg) to 1.55 per cent (capped at Rs 0.80 per kg).

Trade experts warn that even a small rise in costs can affect competitiveness in price-sensitive markets, especially at a time of weak global demand and strong competition from countries such as Vietnam and Bangladesh. Frequent changes in rates may also make long-term pricing decisions more challenging for exporters.

WTO rules permit such remission because it merely neutralizes domestic taxes on exports. Cutting these rates therefore raises exporters' costs at a time when India's shipments are already facing weak global demand, supply disruptions and rising compliance burdens, eroding competitiveness in price-sensitive markets. Further, revising RoDTEP rates frequently makes it difficult to build rebates into long-term pricing and contracts.

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