Indian exports carry two kinds of hidden tax. One is the customs duty paid on imported inputs and materials. The other is the tax embedded along the way: VAT on the diesel that ran the factory’s generator, electricity duty, mandi tax, stamp duty on export documents. GST refunds cover neither. Two schemes return them, and most exporters can claim both on the same shipping bill.
| Duty drawback | RoDTEP | |
|---|---|---|
| What it refunds | Customs duty on inputs used in the export product | Embedded central, state and local taxes not refunded elsewhere |
| Law | Section 75, Customs Act, 1962; Drawback Rules, 2017 | Foreign Trade Policy 2023; DGFT notifications |
| Administered by | CBIC (customs) | DGFT sets rates; customs runs the IT system |
| Rates | Drawback Schedule (All Industry Rates), or a brand rate | Appendix 4R, as % of FOB value, often with a per-unit cap |
| Paid as | Money to your bank account | Transferable e-scrip in the ICEGATE ledger |
| Claimed on | The shipping bill | The shipping bill |
Duty drawback
Section 75: drawback on manufactured exports
When imported materials go into a product that is exported, the customs duty paid on those materials is refunded as drawback. There are two ways to get it.
All Industry Rate (AIR). The Ministry of Finance publishes a Drawback Schedule with rates for thousands of product lines, based on the average duty incidence in the industry. It is updated from time to time. Most exporters use it: you enter the drawback serial number for each item on the shipping bill and the claim is processed automatically. Some lines also carry a per-unit cap.
Brand rate. If your product has no AIR, or the AIR covers less than a set share of the duty you actually paid, you can apply to the jurisdictional customs authority for a brand rate specific to your product, supported by input-output data and duty-paid invoices. It takes longer but can be worth much more for import-heavy products.
Section 74: re-exporting imported goods
A different case: goods imported and then re-exported as they are. Under section 74, most of the import duty (98% if the goods were not used) can be claimed back if they are re-exported within the time allowed, and identified as the same goods.
How drawback is paid
- Register your bank account on ICEGATE and have it validated.
- Declare drawback on the shipping bill item by item, with the correct serial number from the schedule.
- After Let Export Order and the export manifest, the claim is processed and the money is credited to your account.
RoDTEP
The Remission of Duties and Taxes on Exported Products scheme started on 1 January 2021, replacing MEIS. It is designed to be consistent with WTO rules: it refunds taxes actually embedded in exports, not a subsidy on top.
Rates
Rates are listed by 8-digit tariff line in Appendix 4R, as a percentage of the FOB value, often with a value cap per unit. The scheme runs within a fixed budget, so DGFT revises rates and coverage by notification. Always check the current appendix rather than last year’s rate.
Eligibility, briefly
- The product’s tariff line must be in Appendix 4R with a rate.
- Some exports are excluded, for example restricted or prohibited items, and goods exported through certain routes.
- Apparel and made-ups (chapters 61, 62 and 63) use RoSCTL instead.
- Exports by Advance Authorisation holders, EOUs and SEZ units have been covered through separate, time-bound notifications. Check the current DGFT notification before counting on it.
How RoDTEP is claimed
- On the shipping bill, declare that you intend to claim RoDTEP for each item.
- After the export manifest is filed, the claim appears on ICEGATE. Generate the scrip in your RoDTEP ledger.
- Use the e-scrip to pay basic customs duty on your own imports, or transfer it to another importer, which is how most exporters turn it into cash. The scrip is valid for one year from generation.
Drawback or RoDTEP: which applies to you?
- You import raw materials or components and pay customs duty on them: drawback matters most. Check whether your product line has an All Industry Rate, and if your import content is high, whether a brand rate would pay more.
- You buy everything in India: drawback at the All Industry Rate may still apply, because the rate reflects the industry’s average duty incidence, not your own purchases. RoDTEP applies if your tariff line has a rate.
- You import under Advance Authorisation (duty-free inputs): no drawback on those inputs, because no duty was paid. RoDTEP depends on the notification in force.
- You export apparel or made-ups: claim RoSCTL rather than RoDTEP.
Conditions on both
- Realise the export proceeds within the time the RBI allows. If the money never arrives, customs recovers the drawback and RoDTEP with interest.
- Values must be genuine. Over-invoicing to inflate a percentage-based claim is an offence under the Customs Act.
- Keep the records. Invoices, production records and duty-paid import documents may be asked for years later.
Why claims get stuck, and the fix
| Symptom | Usual cause | Fix |
|---|---|---|
| Drawback shows “pending” for weeks | Export manifest not filed, or filed with errors | Ask the shipping line or airline to file or correct the manifest |
| Drawback rejected | Bank account not validated on ICEGATE | Re-register and validate the account |
| No RoDTEP scrip to generate | RoDTEP declaration missing from the shipping bill | Declarations are hard to add after the event; build them into your broker’s checklist |
| Lower RoDTEP than expected | Per-unit cap applied, or the rate was revised | Check the Appendix 4R entry in force on the LEO date |
| Recovery notice | Export proceeds not realised in time | Get an extension through your AD bank before the deadline |
The claim is only as good as the shipping bill. Before filing, ask your customs broker to show you the drawback serial numbers and the RoDTEP declaration for every line.