The Union government has reduced benefits available to exporters under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme by 50% with immediate effect, triggering strong reactions from export and textile industry bodies.
In a notification, the Directorate General of Foreign Trade (DGFT) stated that RoDTEP benefits would now be restricted to half of the previously notified rates and value caps. The order takes effect immediately.
Introduced in 2021, the RoDTEP scheme provides refunds of taxes, duties and levies incurred during the manufacturing and distribution of exported goods that are not reimbursed under other central, state or local mechanisms. Refund rates under the scheme currently range between 0.3% and 3.9%, while textile exporters previously received reimbursements of 2.5% to 4.7%.
Reacting to the decision, S C Ralhan, President of the Federation of Indian Export Organisations (FIEO), said the rate reduction had come at a particularly challenging time for exporters facing global economic headwinds, including slowing demand, rising uncertainty and increasing protectionism. He urged the government to reconsider the decision.
Government data released recently showed that India’s exports rose marginally by 0.61% to US $ 36.56 billion in January, while the trade deficit widened to a three-month high of US $ 34.68 billion.
Textile industry representatives described the abrupt reduction as a significant setback, particularly for the power loom, handloom, spinning and yarn fabric segments. Exporters noted that Indian firms are competing with manufacturers in Vietnam, Bangladesh, Turkey and China, where remission mechanisms remain robust. They cautioned that even a 1–2% cost disadvantage could lead to diversion of export orders and erosion of price competitiveness.
Industry leaders stressed that stable RoDTEP rates were critical to leveraging recently concluded free trade agreements with the UK, the EU and the US.
Durai Palanisamy, President of the Southern India Mill’s Association, appealed to the Centre to restore the earlier notified rates and value caps. G Arulmozhi, President of the Open and Spinning Mills Association, said the reduction would push an already strained industry into further distress, particularly amid continuing pressures linked to US import duties. He urged the government to reinstate the original scheme without reductions.
Ashwin Chandran, Chairman of the Confederation of Indian Textile Industry (CITI), said exporters had booked orders based on the existing RoDTEP framework and expressed hope that the government would re-examine the decision. He emphasised that restoring the earlier rates and value caps was essential for maintaining policy predictability and enhancing global competitiveness.
Industry representatives highlighted that export orders in the textiles sector are typically booked two to three months in advance, with pricing and quotations calculated on the basis of prevailing remission benefits. The immediate restriction of RoDTEP benefits to 50%, they said, disrupts financial calculations for ongoing contracts and risks rendering some orders financially unviable.
Exporters further warned that the sudden policy shift could impose unforeseen financial burdens, affect profitability, capacity utilisation and employment in labour-intensive textile clusters, and undermine India’s credibility as a stable sourcing destination.
They also noted that RoDTEP scrips play an important role in improving liquidity for micro, small and medium enterprises (MSMEs) grappling with elevated borrowing costs. Restoration of the earlier rates, they argued, would safeguard jobs, support export growth and contribute towards the industry’s US $ 100 billion textile export target by 2030.
