Exploring Export Incentive Schemes: How Indian Exporters Can Benefit

India’s vision to become a global manufacturing hub and boost its foreign trade has been supported by a range of export incentive schemes. These schemes are not only designed to reduce transaction costs and increase liquidity for exporters but also to ensure that exported goods are free from domestic taxes and duties, thereby enhancing global competitiveness. This article explores the major export incentive schemes in India and explains how exporters can derive maximum benefits from them.

1. RoDTEP: Neutralising Embedded Taxes

The Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, introduced in 2021 to replace the WTO-non-compliant MEIS scheme, is a cornerstone of India’s tax-neutral export policy.

• Exporters receive a rebate as a percentage of the FOB value (or a fixed per-unit amount) of their exports, as notified for each product in the RoDTEP rate schedule.
• RoDTEP Credit issued as electronic transferable scrips.  
• Benefit Rates range from 0.3% to 4.3% of FOB depending on the product.

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By claiming RoDTEP benefits, exporters can ensure that their product pricing reflects only the value of the goods and not the hidden tax burdens. This is particularly useful in industries like leather, engineering goods, and chemicals where domestic levies are not offset under GST.

2. RoSCTL: Exclusive Support for Apparel and Made-Ups

For exporters in the textile and apparel sector, the Rebate of State and Central Taxes and Levies (RoSCTL) scheme offers focused relief. It provides rebates of embedded state and central taxes for exports of apparel, garments and made-ups (home textiles), and works on similar principles as RoDTEP.

• RoSCTL applicable to exports of garments and made-ups under Chapters 61, 62, and 63 of ITC-HS.
• It offers rebates up to 6% of FOB value.
• It is extended until March 31, 2026.

This scheme supports India’s textile hubs like Tiruppur and Panipat by allowing exporters to reclaim state taxes on fuel, electricity, and logistics critical in cost-sensitive markets like the EU and US.

3. Advance Authorization

The Advance Authorization Scheme allows duty-free import of raw materials and inputs used in the manufacture of export products. This scheme is a duty exemption mechanism under Chapter 4 of the FTP.

• This scheme is provided based on Standard Input-Output Norms (SION) or self-declared norms.
• The Advance Authorisation valid for 18 months for export obligation.
• This scheme is available for both physical and deemed exports.

Manufacturers can import items like fabrics, chemicals, and packing materials without paying customs duty, thereby reducing input costs significantly. It’s widely used in pharmaceuticals, engineering, and textile sectors.

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4. EPCG Scheme

The Export Promotion Capital Goods (EPCG) scheme supports exporters by allowing duty-free import of capital goods, with an obligation to export six times the duty saved within six years. That is, exporters allowed to Import of capital goods at 0% Basic Customs Duty are allowed under EPCG, subject to an export obligation.

• This Scheme covers import of machinery and technology used for manufacturing.
• This scheme provides exemption from Basic Customs Duty (BCD) and IGST.
• It is applicable to both goods and service exporters.

This scheme facilitates technology upgradation and capacity building. The textile mill importing advanced looms under EPCG can enhance productivity and fulfill export obligations over time.

5. Duty Drawback Scheme

This traditional scheme offers a post-export refund of duties paid on imported inputs used in manufacturing export goods. This scheme provides two types rates for products which includes,

• All Industry Rate (AIR): Preset rates for common products.
• Brand Rate: Customised refund for unlisted or high-duty products.

It ensures tax neutrality for imported components, benefiting sectors such as electronics, automobile parts, and jewelry. The refund is usually processed quickly, aiding exporter cash flow.

6. Interest Equalization Scheme (IES)

The IES reduces the cost of capital by offering interest subsidies on export-related credit.

• It provides 3% subsidy for MSME manufacturers, 2% for others in notified sectors.
• It is applicable on pre-shipment and post-shipment rupee credit.

Exporters can access loans at significantly lower rates, improving working capital management and enabling timely execution of orders, especially for MSMEs.

7. SEZs and EOUs

Special Economic Zones (SEZs) and Export Oriented Units (EOUs) offer exporters the benefit of operating in duty-free enclaves.

 SEZ Benefits:

• There is no customs or GST on procurement.
• This scheme provides 100% Income Tax exemption on export profits for initial years (now sunset for new units).
• This scheme had simplified compliance and single-window clearances.

  EOU Features:

• This scheme provides full duty exemption on imports.
• Exporters can sell domestically with appropriate duties.
• This is Popular in textiles, pharmaceuticals, and electronics.

These setups suit businesses engaged in continuous, large-scale exports. SEZs particularly attract IT, pharma, and high-tech manufacturing companies due to infrastructure and policy support.

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8. Transport and Marketing Assistance (TMA)

TMA provides financial support for international freight and marketing costs, mainly for agricultural and processed food exports.

• It reduces the burden of high logistics costs to remote markets.
• It encourages exports to Latin America, Africa, and Central Asia.

The rice exporter shipping to West Africa can get freight reimbursement under TMA, improving competitiveness in price-sensitive markets.

9. Market Access Initiative (MAI)

The MAI scheme supports exporters’ participation in international trade fairs, brand-building exercises, and market surveys. Export Promotion Councils and industry bodies can get MAI grants to organize trade fairs, buyer-seller meets, market research, etc. The government also provides financial assistance for export promotion activities.

10. Status Holder Scheme & Facilitation

Exporters with substantial export performance are given status certificates (one to five star export houses) based on their export earnings. This scheme provides various benefits such as:

• Faster clearance from customs.
• Exemption from furnishing bank guarantees.
• Ability to outsource manufacturing while retaining export credit.

How Exporters Can Strategically Benefit

• Combine schemes: Use AA or EPCG for inputs/capital goods and claim RoDTEP/RoSCTL/drawback post-export.
• Plan Capex smartly: Use EPCG before purchasing new machinery.
• Use SEZ/EOU judiciously: For high-volume exporters, setting up in SEZs reduces compliance overhead.
• Avail IES for finance: Especially useful for seasonal or cyclical exporters.
• Track DGFT updates: Many schemes are periodically modified with sectoral relaxations.

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Conclusion

India’s export incentive schemes are a WTO-compliant framework that enhances the viability and profitability of export-oriented businesses. By strategically leveraging RoDTEP, EPCG, Advance Authorization, Duty Drawback, and other financial tools, exporters can reduce costs, improve cash flow, and compete globally. With proper planning and awareness, these schemes can be a game-changer for Indian businesses seeking to thrive in international markets.

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