India is planning to increase support for exporters by strengthening its RoDTEP scheme, which refunds taxes and duties paid on exported goods. The move comes as the Middle East conflict and high shipping costs hurt India’s trade outlook.
The scheme is currently valid until September 30 and has a budget of just over $1 billion. Officials said the government is considering extending it for another five years and increasing funding, though a final decision has not been made. RoDTEP helps exports stay competitive by refunding taxes that are not covered under other government programmes. It supports more than 10,000 products, including textiles, farm goods and engineering products. Exporters currently receive incentives worth 1% to 4% of product value.
India’s exporters are facing pressure from rising freight costs on Gulf shipping routes and months of high U.S. tariffs under President Donald Trump. The Middle East conflict has added more uncertainty to trade. India’s merchandise exports fell 7.4% in March compared with the previous year. Exports dropped in 24 out of 30 major sectors. Shipments to key Middle East markets such as the UAE and Saudi Arabia also declined sharply.
The finance and commerce ministries are now discussing changing to the export scheme. Earlier this year, incentive rates under the programme were cut after the federal budget, but later restored in March as the regional conflict worsened. Export industry representatives say the current incentive rates are still too low to offset rising costs faced by businesses.
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India recently launched a $1.9 billion loan plan to help businesses that are running out of cash because of the current crisis. In March, the government also offered insurance support for shipments passing through affected trade routes to reduce costs and avoid order cancellations.
