The government on Monday restored the full benefits of the tax refund scheme for exporters facing business disruption from the war in West Asia and tariffs.
The Director General of Foreign Trade (DGFT) superseded its earlier notification of 23 February, which had reduced benefits under Remission of Duties and Taxes on Exported Products (RoDTEP) by 50%, according to a notification.
The statement said this step is intended to provide timely support to Indian exporters facing elevated freight costs and war-related trade risks arising from disruptions in the Gulf and the wider West Asia maritime corridor.
“The decision reflects the Government’s continued commitment to ensuring a stable, responsive, and supportive policy environment for exporters, while sustaining India’s export competitiveness in a challenging global environment,” it said.
The RoDTEP scheme is an Indian government initiative, effective from 1 January 2021, that refunds embedded, unrefunded central, state, and local taxes such as value-added tax on fuel and electricity duty paid on inputs used in exported products. The budget allocation under the scheme for 2025-26 was ₹18,232 crore. The scheme's budget was proposed to be increased to ₹21,709 crore in 2026-27, but the budget allocated was ₹10,000 crore.
“It is a positive step, and we thank the government for accepting exporters’ demands,” said Ashwani Kumar, partner at Victor Forgings and former president of the Federation of Indian Export Organisations.
“Financially, exporters will get some relief. However, challenges remain—many exporters, especially in sectors like forging and tool-making, have suffered significant losses due to gas shortages and are being forced to invest in new machinery, which is a difficult situation,” he said. “That said, overall, this move comes as a major relief.”
Ajay Srivastava, founder of Global Trade Research Initiative (GTRI), said the initial reduction was hard to justify as RoDTEP is not a subsidy and simply refunds taxes exporters have already paid.
However, the RODTEP restoration decision is valid for exports made up only 31 March—one week from now, said Srivastava. “No one knows what rates apply after 31 March. This creates huge uncertainty for the exporters in such uncertain times. No export contracts can factor RODTEP benefits in such cases.”
For exporters operating on tight margins, stable incentives are critical for pricing and long-term planning, according to Srivastava. “Locking in RoDTEP rates for the next five years would provide that certainty, enabling firms to integrate these refunds into cost structures and compete more effectively in global markets.”
