RoDTEP Scheme

RoDTEP stands for Remission of Duties and Taxes on Exported Products. It is a scheme through which the Indian government gives back to exporters the hidden taxes and duties they already paid while making a product, but which normal export benefit schemes do not refund. The idea is simple: a country should not "export its taxes" along with its goods, because that makes the goods costlier and less competitive abroad.

Why does it exist?

When a company makes something to export, it pays many small taxes and duties along the way that are hidden inside the cost of the product. Examples include VAT on fuel used in transport, electricity duties, and taxes on inputs that other export schemes do not cover. If these hidden costs are not refunded, Indian goods become more expensive than goods from countries that do refund them, making Indian exporters less competitive. RoDTEP was designed to fix this by refunding exactly these uncovered, embedded taxes.

Where did it come from?

RoDTEP replaced an older scheme called the Merchandise Exports from India Scheme (MEIS). The United States had challenged MEIS at the World Trade Organization (WTO), arguing it was an export subsidy that violated global trade rules. In dispute DS541, a WTO panel ruled against India on 31 October 2019, and India appealed on 19 November 2019.

The dispute was eventually settled in July 2023 through a mutual understanding between India and the US. Meanwhile, a committee headed by G.K. Pillai, a former Union Home Secretary, was set up to design a WTO-compatible replacement. Based on its recommendations, the government launched RoDTEP in January 2021, effective from 1 January 2021, to replace MEIS.

How does it work?

Under RoDTEP, refund rates are fixed for different product categories, usually as a percentage of the Free-on-Board (FOB) value of the exported goods (the value of goods at the point they are loaded onto the ship, before shipping and insurance costs). Rates typically range from about 0.3% to 4.3% of FOB value, depending on the product.

The refund is given as an electronic scrip (called an e-scrip), which is credited to the exporter's account on the government's ICEGATE portal (Indian Customs' electronic gateway). Exporters can then use this e-scrip to pay basic customs duty on their own future imports, or transfer it to someone else who needs to pay customs duty.

Who is covered, and since when?

RoDTEP originally covered a wide range of exported goods. Over time, its coverage expanded: benefits for exports from Advance Authorisation holders, Export Oriented Units (EOUs) and units in Special Economic Zones (SEZs) were restored effective from 1 June 2025, after being kept out in the scheme's early phase. The government has allocated about ₹18,233 crore for RoDTEP in the 2026-27 financial year (FY26).

RoSCTL, a related scheme

RoSCTL stands for Rebate of State and Central Taxes and Levies. It works alongside RoDTEP but is specifically for exports of apparel and made-up textile articles (roughly Chapters 61 to 63 of the Customs Tariff, covering knitted and woven clothing and textile articles). RoSCTL started on 7 March 2019 and refunds state and central taxes not covered by other duty drawback schemes, similar in spirit to RoDTEP but focused on the textile sector because of its labour-intensive, export-oriented nature.

Why WTO compliance matters

Unlike MEIS, which gave benefits without proof that they only offset actual embedded taxes, RoDTEP is designed to refund only taxes actually paid, verified through a transparent, rate-based mechanism. This distinction matters under WTO rules, because refunding actual indirect taxes on exports is allowed, while giving a benefit that exceeds the taxes paid, or is tied to export performance without basis in actual costs, can count as a prohibited export subsidy.

Commonly confused concepts

• RoDTEP vs Duty Drawback: Duty Drawback refunds customs duties paid on imported inputs used to make exported goods. RoDTEP refunds other embedded taxes (like fuel VAT or electricity duty) that duty drawback does not cover. Exporters can claim both together for the same shipment, since they cover different kinds of taxes.
• RoDTEP vs MEIS: MEIS gave incentives as a percentage of export value regardless of actual taxes paid, which the WTO found to be a subsidy. RoDTEP is designed to only remit taxes actually incurred, making it WTO-compliant.
• RoDTEP vs RoSCTL: RoDTEP applies broadly across many product categories; RoSCTL is dedicated to apparel and textile articles and predates RoDTEP.

Issues, criticism and the way forward

Exporters have sometimes complained that RoDTEP rates are lower than what they received under MEIS, reducing the incentive for exports of certain products. There are also concerns about delays in getting e-scrips credited and used. Trade economists have suggested that as global tariffs rise and trade rules shift (such as new US tariff actions), India needs to periodically review whether its refund rates truly reflect current embedded tax costs, which is part of why NITI Aayog's review looks at both domestic price and demand effects and comparisons with other countries' schemes.

Concepts to Know

• FOB (Free on Board) value: The value of goods at the point they are loaded onto the ship for export, not counting freight (shipping cost) and insurance after that point.
• e-scrip: An electronic certificate credited to an exporter's account, which can be used like a voucher to pay basic customs duty, or sold/transferred to another importer.
• Embedded taxes: Taxes and duties that get built into the cost of a product during its production (like fuel tax or electricity duty) but which standard export refund schemes may not directly cover.
• Export subsidy (under WTO rules): Financial support from a government that is tied to export performance and gives exporters an unfair advantage; the WTO's SCM Agreement restricts or prohibits many forms of these.