In a notification, the Directorate General of Foreign Trade said that “RoDTEP benefits shall be restricted to 50% of the notified rates and value caps with immediate effect”, prompting exporters to urge the government to review the decision amid slowing demand and heightened uncertainty.
“With immediate effect, the applicable RoDTEP rates for all HS Lines as notified… shall be limited to 50% of the existing rates and, where applicable, 50% of the notified value caps,” DGFT said.
The RoDTEP scheme refunds taxes and duties that are not rebated under any other scheme and benefit rates range between 0.3-4.3%.
“The reduction in RoDTEP rates and the 50% reduction in value caps come at a particularly difficult juncture, when Indian exports are already navigating significant global headwinds, including slowing demand, heightened uncertainty, and rising protectionist tendencies. We urge the government to review and reconsider this decision,” said S C Ralhan, President, Federation of Indian Export Organisations (FIEO).
With the revision, the rebate on unginned raw cotton of staple length not exceeding 20 mm has been reduced to 1.55% with a cap of Rs 0.80 per kg from 3.1%, capped at Rs 1.60 per kg.
Trade experts said that World Trade Organization 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.“Halving RoDTEP rates will raise the cost of exporting from India by reducing refunds of domestic taxes that exporters cannot otherwise recover. In price-sensitive sectors, even a 1–2% increase in costs can decide whether orders are won or lost,” said GTRI founder Ajay Srivastava, adding that the cut comes amid competitors such as Vietnam and Bangladesh still enjoying lower costs and preferential market access.
India’s goods trade deficit in January was $34.68 billion from $$23.43 billion a year ago, as exports rose 0.61% on-year at $36.56 billion while imports, driven by gold and silver, were $71.24 billion in January.
April-January goods exports were up 2.2% on-year at $366.6 billion.