Level playing field: Government restores duty, tax benefits for certain categories of exporters to boost competitiveness

ew Delhi: The government has decided to restore certain tax and duty benefits for specified categories of exporters in a move aimed at reviving the competitiveness of India’s overseas trade.

“The Government of India has announced the restoration of benefits under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme for exports made by Advance Authorization (AA) holders, Export-Oriented Units (EOUs), and units operating in Special Economic Zones (SEZs),” the commerce and industry ministry said in a statement on Tuesday. “The benefits will be applicable for all eligible exports made from 1 June.”

The reinstatement comes about four months after the benefits for these categories were suspended, causing concern among exporters reliant on duty-free schemes.

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The decision is part of a broader effort to ensure a level playing field for all exporters, irrespective of the route they use. The RoDTEP scheme had been operational for exports from domestic tariff areas (DTA) even after the benefit was withdrawn for AA, SEZ and EOU shipments on 6 February this year.

The RoDTEP scheme, introduced in January 2021 after the World Trade Organization ruled against India’s earlier export incentive programmes, is meant to neutralise the burden of non-creditable taxes and levies—such as electricity duties and mandi fees—that are not refunded through other mechanisms. Its design is WTO-compliant, and it is entirely digital, allowing for direct transfer of benefits to exporters.

Exporters said the restoration offers relief when global demand remains uneven and domestic exporters are coping with thin margins. For small and medium enterprises (SME), which often operate on tight margins, such financial support can make a meaningful difference in pricing their products competitively.

More confident

"This is a much-needed relief for the SME export community. The withdrawal of RoDTEP benefits earlier this year had disrupted pricing models for many small and mid-sized exporters, especially those operating through SEZs and under advance authorisation. Restoring these incentives will help us compete more confidently in global markets," said Vinod Kumar, president of the India SME Forum.

According to government data, India disbursed over ₹57,976 crore in RoDTEP benefits from January 2021 to March 2025. The government has earmarked ₹18,233 crore for the scheme in FY26.

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The benefits will now support 10,780 trade lines for DTA exports and 10,795 product lines for AA, SEZ, and EOU shipments, suggesting that the government intends to ensure broad sectoral support.

While industry leaders largely welcomed the move, some of them said the effectiveness of the reinstatement will depend on timely reimbursements and clarity in claim processing.

The decision is seen as a much-needed correction in policy, reaffirming India’s intent to create a predictable and equitable export regime amid tightening global competition, said Arun Kumar Garodia, former chairman of the Engineering Export Promotion Council.

According to Ajay Srivastava, co-founder of the Global Trade Research Initiative (GTRI), the government’s stop-and-start approach to RoDTEP undermines the scheme’s very purpose and its repeated withdrawal for key export categories creates serious uncertainty.

“Exporters, especially SMEs, find it difficult to price products or commit to long-term contracts when they cannot rely on consistent support," Srivastava said. "The reinstatement of benefits from 1 June is a welcome step, but it also raises a fundamental question—why were they cut off mid-cycle in the first place? If India wants to position itself as a predictable and competitive export hub, RoDTEP coverage must be uninterrupted for at least five years. Frequent policy shifts erode trust and hurt our export credibility in global markets.”

Micro, small and medium enterprises contribute about 45% of India’s total exports, playing a key role in sectors such as textiles, engineering goods, pharmaceuticals, and gems & jewellery.

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The total number of MSMEs registered on the Udyam Registration Portal and Udyam Assist Platform was almost 59 million as of 31 January 2025. From 1 July 2020 to 31 January 2025, 71,178 units were deregistered because they had shut down. The data also indicated that 203 million people were employed in MSMEs as of 16 July 2024.