India's government has ordered a review of its two flagship export tax refund schemes, RoDTEP and RoSCTL, setting up two official panels to reframe how nearly ₹2 trillion in payouts are distributed over the next five years, according to Mint.
The move, reported on October 21, 2026, follows a recommendation from the expenditure finance committee in late September for better targeting of funds at a moment when wars in West Asia and Ukraine are squeezing Indian shipments abroad.
What the two panels will do
The first panel, covering the Remission of Duties and Taxes on Exported Products (RoDTEP), will be chaired by Director General of Foreign Trade Lav Agarwal. The second, reviewing the Rebate of State and Central Taxes and Levies (RoSCTL), will be led by Arti Kanwar, additional secretary in the textiles ministry. Both include senior officials and industry executives as members.
Their recommendations are expected to feed into the Union budget deliberations and could form the basis of the revamped frameworks. The commerce ministry has sought over ₹1.3 trillion under RoDTEP for the next five years, a 70% increase over the previous period, while the textiles ministry wants the RoSCTL outlay raised by half to about ₹65,000 crore.
Why the refunds exist in the first place
Both schemes were designed to keep exports zero-rated, in line with global practice: goods sold abroad should not carry the domestic taxes of the country that produced them. The refunds cover embedded central and state levies outside the GST regime, including taxes on fuel and electricity, stamp duty and mandi tax, paid on inputs consumed in production.
RoDTEP spans a broad range of sectors, including special economic zones and bonded warehouses, while RoSCTL is focused mainly on garments. Eligible exporters currently receive between 0.3% and 4.7% of the free-on-board value of consignments under RoDTEP, and between 1.7% and 8.2% under RoSCTL, depending on the product. Exporters received ₹18,233 crore under RoDTEP in the financial year ended March 2026, and another ₹10,100 crore under RoSCTL.
For now, both schemes have been extended from September 30 to December 31, pending a final decision on their continuation for the next five years. The Commerce and Finance Ministries are holding talks over their future, as The Hindu BusinessLine reported.
A more precise mechanism, but at what cost?
The current system relies on a committee set up by the revenue department, which recommends refund rates after examining official and industry data and consulting stakeholders. Following the expenditure finance committee's recommendation, this may be reworked into a more precise, evidence-based mechanism reflecting the taxes and duties actually paid.
Industry voices welcome the intent but warn about the practicalities.
Any better targeting mechanism is welcome, but the panel will have a tough task at hand, said D.K. Nair, textiles expert and former secretary-general of the Confederation of Indian Textile Industry.
It will be very difficult to precisely identify and gather data on all the duty incidences at every stage because there are multiple stages and industries like textiles and garments are highly dispersed, Nair said. Some level of averaging of levies is inevitable in these kinds of industries.
Ajay Sahai, director-general of the Federation of Indian Export Organisations, told Mint last month that continuing both schemes with adequate allocation would signal policy stability at a very challenging time for exporters.
The liberal case for zero-rated exports
There is a principled argument here that goes beyond budget arithmetic. Taxes that stick to exports are, in effect, an export tax by stealth. They make Indian goods more expensive abroad without adding a rupee to government revenue that could not be raised more honestly elsewhere. Refunding them is not a subsidy; it is the removal of a hidden levy, which is why the commerce and textiles ministries insist the schemes comply with World Trade Organization rules.
Timely reimbursements also unlock liquidity blocked in taxes, letting exporters compete against counterparts from countries where embedded taxes are lower or fully refunded. That is a matter of basic fairness toward traders, not industrial policy.
The risk is that a push for precision becomes a push for stinginess. A refund scheme that pays out slowly, or pays out less than the taxes actually embedded in exported goods, simply shifts the burden onto exporters and, ultimately, onto the workers they employ. The government's own GST framework already allows exporters to claim refunds on duties paid and unutilized input tax credit, as the PRS India analysis of GST's impact on exports notes, and the same logic should govern levies outside the GST net.
What happens next
The panels' work will land against a mixed trade backdrop. India's merchandise exports rose 18.5% year-on-year to $260 billion in the first half of FY27 as global demand held strong. Textile and garment exports, however, grew only about 2.4% over the same period, which saw flare-ups in West Asia and uncertainty over US tariffs.
Exporters are also banking on India's recent free trade agreements with the UAE, the UK and the EU to lift shipments once the West Asia conflict abates. Higher allocations would reflect that expectation, but only a credible commitment to the schemes will convince businesses to plan around them.
Queries emailed to the secretaries of expenditure, commerce and textiles, and to the Directorate General of Foreign Trade, remained unanswered until press time, Mint reported.
Frequently asked questions
What are the RoDTEP and RoSCTL schemes?
They are Indian government schemes that refund domestic taxes and levies, outside the GST regime, paid on inputs used in exported goods, keeping exports zero-rated in line with global practice.
How much do exporters receive under these schemes?
Refunds range from 0.3% to about 4.7% of the free-on-board value of consignments under RoDTEP, and 1.7% to 8.2% under RoSCTL, depending on the product.
When do the current schemes expire?
Both schemes were extended in September 2026 from September 30 to December 31, pending a decision on their continuation for the next five years.