A significant regulatory mismatch has emerged between the Foreign Trade Policy (FTP) and Customs regulations that is disrupting duty credit claims by Duty-Free Import Authorisation (DFIA) exporters under the Rodtep scheme. According to reports from Business Standard, Customs is now demanding payments of amounts equal to duty credits granted to DFIA exporters, along with interest, on grounds that consequential amendments were not made in the related Customs notification 76/2021-Cus dated September 23, 2021. Some DFIA exporters have been summoned by the Directorate of Revenue Intelligence as a result of this conflict. The DFIA scheme allows exporters to claim duty-free replenishment of inputs used in exported products based on standard input-output norms (SION), while the Rodtep scheme refunds unrefunded duties/taxes at Central, State and local levels as transferable duty credits that can be used for payment of basic customs duty.
The commerce ministry deleted S.No. (x) from Para 4.55 of the FTP through notification no.70/2023 dated March 8, 2024, removing the bar on earning Rodtep credits against DFIA exports. As reported by Business Standard, this notification also introduced Para 4.59A and Appendix 4RE for Rodtep rates applicable to exports by advance authorisation holders, export-oriented units and Special Economic Zone units. The Rodtep scheme seeks to refund central, state and local taxes embedded in exported goods that are not rebated through any other scheme, with rebates granted to eligible exporters at notified rates as a percentage of FOB value, maintained in an electronic ledger at the ICEGATE portal. The DFIA scheme does not by itself neutralise every central, state or local tax embedded in the manufacture and distribution of an exported product, making the denial of Rodtep credits difficult to reconcile with the remission objective.
According to an alert issued by Cochin Customs, DFIA exporters have claimed Rodtep duty credits to the extent of ₹52 crores. As reported by Business Standard, when compared with ₹34,808 crore allocated under Rodtep in the last two financial years (₹16,575 crore in 2024-25 and ₹18,233 crore in 2025-26), the Rodtep claims of DFIA exporters represent about 0.15 per cent of total allocations. While this represents a small amount for the government, the amounts can be significant for individual exporters, especially MSME exporters, as the Government should retrospectively align the Customs framework with the FTP and specifically clarify the validity and utilisation of Rodtep credits generated against DFIA exports from March 11, 2024.
Industry experts are calling for retrospective alignment of the Customs framework with the FTP and specific clarification on the validity and utilisation of Rodtep credits generated against DFIA exports from March 11, 2024. According to Business Standard reports, any regulatory inconsistency should be resolved in favour of exporters whose claims were based on the amended FTP and whose credits were generated under the new policy framework. The objective of the Rodtep scheme is to refund central, state and local taxes embedded in exported goods that are not rebated through any other scheme, making it difficult to justify denying Rodtep credits merely because the replenished imported inputs receive customs-duty exemption or that the consequential amendment was not made in the related Customs notification.
