(INDIA) — The Directorate General of Foreign Trade (DGFT) cut RoDTEP rates and value caps by 50% across all HS lines in Appendices 4R and 4RE through Notification No. 60/2025-26 issued on February 23, 2026.

The decision took effect immediately and applies to all eligible exports, restricting benefits to half of previously notified levels across the covered tariff lines.

DGFT issued the notification under the Foreign Trade (Development and Regulation) Act, 1992, and released a corrigendum on February 24, 2026 addressing the rationalisation.

The change halves all applicable RoDTEP rates, which previously ranged from 0.3% to 3.9%, and also halves value caps wherever they apply.

One example cited in the notification’s rate schedule involves unginned raw cotton (staple length ≤20 mm), where the rate moved from 3.1% capped at ₹1.60/kg to 1.55% capped at ₹0.80/kg.

The scope spans all product categories and tariff lines listed in Appendices 4R and 4RE under the Foreign Trade Policy 2023, meaning exporters shipping items across those appendices now qualify only for the reduced 50% benefits.

RoDTEP, launched January 1, 2021, reimburses unrebated taxes on exports through e-scrips, with the stated purpose of boosting competitiveness by refunding embedded costs that exporters cannot otherwise recover.

Those costs include central, state, and local taxes and charges such as electricity duties, fuel levies, and mandi charges, which exporters and industry groups have long argued can add to pricing pressure in overseas markets.

The scheme’s design has been presented as a WTO-compliant approach because it neutralizes domestic taxes rather than subsidizing exports, aligning the benefit with tax remission instead of export incentives.

The latest reduction comes alongside a Union Budget move that slashed the FY27 allocation for the scheme by 45% to ₹10,000 crore from ₹18,233 crore in the current FY26, tightening the pool of funds available for remission.

Exporters and trade bodies said the immediate cut risks rippling through contracts already negotiated on the basis of earlier benefit levels, with the impact felt most sharply in price-sensitive segments.

Many exporters described the revised RoDTEP rates as translating into higher export costs, pegging the increase at 1-2% in price-sensitive sectors, and said margins could narrow further at a time of weak global demand.

Some exporters said the cut could erode India’s competitiveness versus Vietnam and Bangladesh, especially when shipping costs remain elevated and uncertainty persists around US tariff policy.

SC Ralhan, President of Federation of Indian Export Organisations (FIEO), called the reduction “very shocking” and urged an immediate review through letters to the Commerce and Finance Ministers.

Ralhan pointed to pressures on MSMEs, which often operate on thinner margins and have less room to absorb sudden changes in remission levels when orders are already booked.

Ajay Srivastava, Founder of Global Trade Research Initiative (GTRI), warned that frequent revisions can create policy uncertainty for exporters who price orders months in advance and compete against suppliers with steadier support structures.

Srivastava recommended a 5-year horizon for pricing stability, linking predictability to exporters’ ability to win orders, protect smaller firms, and sustain export growth.

Textile and apparel exporters in clusters including Tirupur, Noida, and Ludhiana flagged disruptions tied to locked-in spring-summer contracts, with some shipments already at ports or close to dispatch when the effective date took hold.

Those exporters said contract terms often assume a certain remission level, leaving firms to either renegotiate with overseas buyers or absorb the difference, a harder choice in commodity-like segments where small price changes can shift orders.

Sarabpreet Singh, Business Head at Sukhvinder Pal Singh & Sons, highlighted risks to volumes, jobs, and forex if the RoDTEP reduction combines with other cuts such as RoSCTL.

Industry representatives said the immediate nature of the notification intensified the strain, because shipments after February 23, 2026 fall under the halved benefits even when production and sourcing decisions were made earlier.

Exporters also framed the change as a broader competitiveness issue, arguing that remission supports pricing in categories where buyers can switch sourcing countries quickly and where buyers negotiate aggressively on landed cost.

The reduction applies across all HS lines in Appendices 4R and 4RE, which exporters said makes it difficult to ring-fence the impact to a few industries, even if the intensity varies by product.

For sectors with longer lead times, companies said a sudden revision can force recalculation of quotations and can complicate delivery commitments already tied to shipping schedules and seasonal demand.

Exporters also said the change could strain supply chains that depend on steady order flows, particularly where factories manage capacity based on expected export volumes and where working capital is linked to confirmed orders.

In January 2026, exports grew marginally 0.61% to $36.56 billion, trade data showed, while the trade deficit stood at $34.68 billion.

That snapshot added urgency to industry concerns, with exporters arguing that any further hit to competitiveness could weigh on already modest growth in outbound shipments.

Exporters urged the government to rethink the revised rates amid geopolitical tensions, saying uncertainty in global markets raises the premium on stable policy and predictable cost structures.

Some firms said they now need to reassess pricing on new bids, revisit break-even calculations, and re-evaluate which product lines can remain competitive after the remission cut.

Companies also said they will have to review the fine print on contracts where pricing formulas incorporate tax remission, particularly in segments where buyers expect the exporter to bear cost swings.

Several exporters said they will monitor the February 24, 2026 corrigendum closely and look for any further clarifications from DGFT that might affect implementation across tariff lines and documentation flows.

Trade bodies said they plan to engage with policymakers through forums such as FIEO and with analysts tracking the scheme’s design, including GTRI, as they push for dialogue on possible revisions.

Exporters said the next few weeks could prove critical for sectors that are currently dispatching seasonal orders, because buyers may seek discounts or delay placements if Indian suppliers reprice due to lower remission.

Others said they will track budget and policy developments that influence export incentives more broadly, arguing that exporters need visibility on remission support to plan investments and sustain capacity.

With Notification No. 60 in force and the corrected rationalisation issued the next day, exporters said the immediate task is to quantify the hit product by product, then decide whether to renegotiate, absorb costs, or step back from low-margin orders.