Industry Odisha Bureau, Sep 30: India is weighing nearly ₹2 trillion in tax refunds for exporters over five years. RoDTEP and RoSCTL would get more funds. The aim is easier liquidity and steadier rates amid global challenges.
Indian exporters are paying more to move their goods. Logistics costs have climbed, and supply chains have been disrupted. Now India is considering a sizeable cushion.
The government may increase tax refund outlays to almost ₹2 trillion over five years. The money would flow through two schemes, RoDTEP and RoSCTL. Three people aware of the deliberations described the plan.
The aim is to ease exporter liquidity and partly shield firms from global challenges. The proposal is still under consideration, not yet approved.
Five years instead of yearly guesswork
RoDTEP stands for Remission of Duties and Taxes on Exported Products. RoSCTL is the Rebate of State and Central Taxes and Levies.
The commerce ministry wants a RoDTEP corpus above ₹1.3 trillion. That is over 70% more than the five years through FY26. The textiles ministry seeks nearly 50% more for RoSCTL, at ₹65,000 crore.
These are five-year envelopes, not annual budgets. For context, RoDTEP spending was ₹18,233 crore in FY26, a revised estimate. RoSCTL spent ₹10,010 crore that year. FY27 budgets stand at ₹10,000 crore and ₹5,000 crore, subject to revision.
Exporters say certainty matters as much as size. Industry executives say refund rates are often cut when allocations fall short. A five-year commitment could offer clearer visibility and help avoid interim cuts. That, export bodies argue, helps firms price contracts better.
Refunds, not profits
Both schemes rest on the idea of zero-rated exports. Under global best practice, exports should not carry domestic taxes. Yet some hidden central and local taxes still enter production costs. These include levies linked to fuel, electricity, stamp duty and agricultural fees.
RoDTEP refunds range from 0.3% to about 4.5% of freight-on-board value, executives say. RoSCTL refunds range from 1.7% to 8.2%, depending on the product.
Ajay Sahai is director-general of the Federation of Indian Export Organisations (FIEO). He says refunds do not raise exporters’ profits. Instead, they aim at boosting competitiveness by returning taxes exporters should not bear.
Global pressures raise the stakes
Small and medium units in labour-intensive sectors are especially affected. A flare-up in the West Asia war has pushed up logistics costs. A new US law proposing tariffs up to 100% on Russian oil importers adds uncertainty.
Overall exports, however, have held up. Merchandise exports rose almost 18% year-on-year to $216 billion through August.
Ministries also expect export demand to rise in coming years. They hope firms will use new trade pacts with the UAE, UK and EU. That hope rests on the West Asia conflict easing first.
Textiles face their own test
Textiles tell a different story. RoSCTL covers only textiles and garments, while RoDTEP spans many sectors. RoDTEP also covers units in special economic zones and bonded warehouses.
Textile and garment exports slipped 0.24% through August. Apparel shipments fell even as textile supplies rose, industry data showed. Rivals such as Vietnam and Bangladesh have lower export costs. Full tax refunds help Indian goods stay competitive against them.
Industry pushes for stability
Pankaj Chadha, chairman of EEPC India, wants adequate RoDTEP funding. He notes Chapter 72, mainly iron and steel, remains outside RoDTEP due to funding limits. He estimates ₹25,000–30,000 crore a year could suffice for five years.
Mithileshwar Thakur of the Apparel Export Promotion Council says RoSCTL complies with WTO rules. He wants higher rates, citing rising fuel and input prices.
RoDTEP itself arrived in 2021, designed around WTO principles. The earlier Merchandise Exports from India Scheme had fallen foul of WTO rules. RoSCTL began in 2019, replacing a scheme that rebated only state levies.
Cabinet decision still ahead
The finance ministry has examined both proposals. They could reach the Cabinet within a month, the people said. The Centre also plans to seek extension of about a dozen schemes, including RoSCTL.
Predictability as trade policy
The proposal is about more than bigger refund cheques. It could give exporters a clearer view of costs for five years. That visibility helps them quote prices with more confidence. Whether the Cabinet backs the full increase remains to be seen.
