Incentives
RoDTEP, Drawback and the schemes that decide your margin
Between RoDTEP and Duty Drawback, a few percent of FOB value comes back to you on every shipment. Only if you declared the claim on the shipping bill, though. There is no retrospective fix.
The RoDTEP position described here reflects DGFT Notification No. 74/2025-26 dated 31 March 2026, which extended the scheme from 1 April 2026 to 30 September 2026 with the Appendix 4R and 4RE rates and value caps unchanged. That window closes within weeks of this writing, and the scheme has now been extended in six- and twelve-month increments several times. Confirm the current notification on the DGFT site before quoting a price that depends on it. Rates and eligibility have been restricted and then restored mid-year before, most recently when Notification 66/2025-26 of 23 March 2026 reinstated rates after an interim reduction.
Most exporters treat incentives as an accounting matter, something the finance team handles once the goods have gone. That is exactly backwards. The refunds are a known percentage of FOB value, they land in your account, and they are therefore part of your price. They can be the difference between winning an order at a defensible margin and losing it to somebody who costed properly.
What each scheme actually refunds
These schemes are not alternatives to each other. They refund different things, which is why several can run on the same shipment.
| Scheme | Refunds | Form | Typical size |
|---|---|---|---|
| RoDTEP Remission of Duties and Taxes on Exported Products |
Embedded taxes not otherwise refunded: VAT on fuel, mandi tax, electricity duty, stamp duty | Transferable e-scrip on ICEGATE | Generally 0.3% to 4.3% of FOB, with per-unit value caps |
| Duty Drawback | Customs duty on imported inputs used in the exported product | Cash, to your bank account | Per the All Industry Rate schedule, or Brand Rate where AIR does not fit |
| RoSCTL | State and central levies on apparel and made-ups (Chapters 61, 62, 63) | Transferable scrip | Sector-specific |
| Advance Authorisation | Duty-free import of inputs against an export obligation | A licence, not a refund | The whole duty on inputs, pre-empted rather than reclaimed |
| EPCG | Duty-free import of capital goods against an export obligation | Licence | Duty on machinery. Large, and a multi-year commitment |
| GST refund | IGST paid on exports, or accumulated input tax credit under LUT | Cash refund | The tax itself. A cash-flow item rather than a subsidy |
What stacks with what
The rule is easy to state and easy to get wrong in practice: you may claim more than one benefit, provided you are not claiming the same tax twice.
- RoDTEP and Duty Drawback can both be claimed on the same shipping bill. They refund different things. Drawback covers customs duty on imported inputs, RoDTEP covers embedded local taxes that no other mechanism reaches.
- RoDTEP and a GST refund can both be claimed. A GST refund is not an incentive, it is your own tax coming back to you.
- RoDTEP for Advance Authorisation, EOU and SEZ exports sits under Appendix 4RE, as distinct from Appendix 4R for DTA exports. This has been the subject of successive notifications with their own end dates, so check which appendix and which notification applies to your unit type.
- Drawback and Advance Authorisation on the same inputs, generally not, because the duty was never paid in the first place. Where you export under AA, the drawback claim is limited accordingly.
How the RoDTEP claim actually works
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Declare the claim on the shipping bill
The claim is made at filing, in the shipping bill itself. This is the step that goes wrong, and when it goes wrong it goes wrong permanently: a claim not declared at filing cannot be added afterwards. Every shipping bill your CHA files should carry the declaration as standard, not as something remembered shipment by shipment.
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EGM is filed by the shipping line
Customs processing begins once the Export General Manifest is on record. Delays here belong to the line rather than to you, but they still delay your scrip.
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The scroll is generated
Customs generates a scroll showing the admissible amount against each shipping bill, and it appears in your ICEGATE account.
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Create the e-scrip
In the ICEGATE e-Scrip module you convert scrolled amounts into a credit scrip. You have to take this action. Nothing happens on its own.
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Use or transfer it within twelve months
A RoDTEP e-scrip is valid for one year from generation. You can use it to pay basic customs duty on your own imports, or transfer it to another IEC holder. That second option matters if you do not import, because it makes the scrip a saleable asset rather than a coupon you cannot spend. Scrips do expire. Put it in the diary.
The RoDTEP schedule gives both a rate, as a percentage of FOB, and a value cap, as a maximum per unit. Your entitlement is whichever is lower. On a premium or high-value variant of a product the cap usually binds, so the headline percentage overstates what you will actually receive. Read both columns against your exact 8-digit line, and make sure that line is the right one. The method is in the ITC-HS guide.
Drawback: All Industry Rate versus Brand Rate
| All Industry Rate (AIR) | Brand Rate | |
|---|---|---|
| What it is | A published rate per product line, set by government | A rate fixed for your specific product and input consumption |
| When to use | Default, when your line is in the schedule and the rate is fair | Your line is not in the schedule, or AIR gives you less than 80% of the duty actually paid |
| Effort | None beyond declaring correctly | An application with consumption data and duty evidence |
| Deadline | — | Apply to the jurisdictional Principal Commissioner or Commissioner of Customs, generally within 60 days of export |
The 80% test is the one to remember. If you import a significant share of your inputs and the AIR looks thin, run the arithmetic once. A Brand Rate application is a one-off effort against a recurring benefit.
What this does to a price
All of the above matters for one reason. Incentives are a line in the cost stack, and the exporter who models them can quote a lower price at the same net margin. Illustrative, on one container:
| Line | ₹ | Note |
|---|---|---|
| FOB invoice value | 6,57,000 | What the buyer pays |
| Cost of goods and export costs | −6,00,000 | From the cost stack |
| Gross margin before incentives | 57,000 | 8.7% |
| RoDTEP at 1.4% of FOB | +9,198 | Subject to the value cap |
| Drawback at 1.1% of FOB | +7,227 | AIR, cash to bank |
| Net margin | 73,425 | 11.2% of FOB |
That is 2.5 percentage points of margin created by paperwork you were entitled to anyway. It is also the room you have to discount and still win a competitive order, provided you know it is there before you quote rather than after. Where your quote then sits against the market is a separate question, covered in export pricing and the market band.
The mistakes that cost the most
- Not declaring the claim on the shipping bill. Irreversible. Make it a standing instruction to your CHA and audit it monthly.
- Wrong HS code. The claim attaches to the line. A wrong line means a wrong rate, and recovery with interest if it is caught.
- Letting scrips expire. Twelve months from generation. If you do not import, transfer them. A scrip you never used is a discount you gave the government.
- Reading the rate and ignoring the cap. On high-value goods the cap usually binds.
- Assuming last year's rate. Appendices get amended, and so do end dates.
- Never testing for Brand Rate. If AIR yields less than 80% of the duty you actually paid, you are leaving money behind on every shipment.
- Treating incentives as a windfall. If they are not in the cost model, your pricing is wrong in a direction you cannot see.
Scheme rates, appendices, eligibility and end dates change by notification, sometimes at short notice and sometimes retrospectively. Everything above describes how the mechanisms work. None of it is a statement of your entitlement. Confirm the position for your product, your unit type and the current date with DGFT, CBIC or a customs consultant before it goes anywhere near a quotation.
