India Halves Tax Remission for Exporters, Cost Pressures on Shipments to Rise: GTRI

The government has halved export rebates under the Remission of Duties and Taxes on Exported Products scheme across tariff lines, GTRI said in a report, quoting an official notification. The value caps have also been reduced by half.

For instance, the rebate on unginned raw cotton of staple length not exceeding 20 mm has been reduced from 3.1%, capped at ₹1.60 per kg, to 1.55% with a cap of ₹0.80 per kg, it said.

RoDTEP is not an export subsidy but a refund of embedded taxes and levies paid during production—such as state taxes on fuel, electricity duties and mandi charges—that are not otherwise rebated.

WTO rules permit such remission because it merely neutralises domestic taxes on exports. Cutting these rates therefore raises exporters’ costs at a time when India’s shipments are already facing weak global demand, supply disruptions and rising compliance burdens, eroding competitiveness in price-sensitive markets, says Ajay Srivastava, founder of GTRI.

The cut comes when global demand is weak, logistics and compliance costs remain high, and competitors such as Vietnam and Bangladesh still enjoy lower costs and preferential market access, he said. Lower remission will make Indian exports harder to price competitively, squeeze already thin margins, and may discourage smaller firms from expanding abroad—potentially slowing export growth at a time when diversification and scale are crucial.