RoDTEP vs Duty Drawback: Complete Comparison for Indian Exporters

Key takeaways

Indian exporters have access to two major government schemes that reimburse taxes and duties embedded in exported products: RoDTEP (Remission of Duties and Taxes on Exported Products) and Duty Drawback (under the Customs Act, 1962). Both put money back in the exporter's pocket, but they target completely different cost layers.

Despite being separate schemes with separate legal bases, they are frequently confused. Many exporters assume they are alternatives. That claiming one means forgoing the other. That assumption costs real money. In this guide, we break down exactly what each scheme covers, how the claim processes differ, and critically, how to claim both on the same shipment to maximise your export incentives.

What is RoDTEP?

RoDTEP (the Remission of Duties and Taxes on Exported Products) was introduced on 1 January 2021 as a WTO-compliant replacement for the earlier MEIS (Merchandise Exports from India Scheme). While MEIS was challenged at the WTO as a prohibited export subsidy, RoDTEP was specifically designed to withstand WTO scrutiny by reimbursing only those taxes and duties that are not refunded through any other mechanism.

The core idea is simple: Indian exporters pay a range of embedded taxes at the central, state, and local levels that their competitors in other countries do not bear. These include electricity duty on power consumed during manufacturing, mandi tax on agricultural raw materials, stamp duty on export documentation, fuel taxes on transportation (including state VAT on diesel and petrol), property tax on factory premises, and various municipal levies. None of these are refunded through GST input tax credit or Duty Drawback. RoDTEP fills that gap.

The scheme is notified under Section 3 of the Foreign Trade (Development and Regulation) Act, 1992, and administered by DGFT. Rates are specified product-by-product in Appendix 4R of the Foreign Trade Policy, expressed as a percentage of FOB value with per-unit caps where applicable. The benefits are credited to an electronic credit ledger on the ICEGATE portal, linked to the exporter's IEC.

What is Duty Drawback?

Duty Drawback is one of the oldest export incentive mechanisms in India, governed by Sections 74 and 75 of the Customs Act, 1962 . It refunds customs duties (basic customs duty, additional customs duty, and other levies) paid on imported inputs that are used in the manufacture of exported goods.

Section 74 applies to re-export of imported goods. If you import goods and export them without using or manufacturing anything from them (or after minor processing), you can claim back up to 98% of the customs duty paid on the original import, provided the goods are re-exported within two years of import. The rate reduces based on how long the goods were in India and whether they were used.

Section 75 is the more commonly used provision. It applies when imported materials are consumed in the manufacture of exported goods. For example, if you import steel coils, manufacture auto components, and export them, Section 75 lets you claim back the customs duty paid on the steel. The government notifies All Industry Rates (AIR) for thousands of tariff items based on average input consumption norms. If the AIR does not reflect your actual duty incidence, you can apply for a brand rate specific to your company.

Duty Drawback is administered by the Department of Revenue under the Ministry of Finance, not by DGFT. Claims are processed through the customs house where the shipping bill is filed. The Drawback amount is either credited directly to the exporter's bank account or adjusted against outstanding customs liabilities.

Head-to-Head Comparison: RoDTEP vs Duty Drawback

The table below lays out the key differences across every dimension that matters for your export operations.

Can You Claim Both RoDTEP and Duty Drawback?

Yes. RoDTEP and Duty Drawback are not mutually exclusive . You can (and should) claim both on the same export shipment. This is one of the most commonly misunderstood aspects of Indian export incentives, and failing to claim both is leaving money on the table.

The reason they can be claimed together is that they cover entirely different cost layers. RoDTEP reimburses embedded taxes that have no other refund mechanism. Electricity duty, mandi tax, fuel taxes, stamp duty, and similar levies. Duty Drawback refunds customs duties paid on imported raw materials used in manufacturing the exported product. There is no overlap.

Here is a practical example. Consider a textile exporter shipping garments worth Rs 10 lakh FOB:

RoDTEP Rates by Sector (Appendix 4R Breakdown)

RoDTEP rates are notified per HS code in Appendix 4R of the Foreign Trade Policy. The rates were set by a committee chaired by Dr. G.K. Pillai and are revised periodically. Below are the indicative rate ranges for major export categories. Always verify the exact rate for your HS code on the DGFT or ICEGATE portal.

Drawback: All Industry Rate (AIR) vs Brand Rate

The Duty Drawback scheme offers two methods for calculating your refund, and choosing the right one can significantly affect your benefit amount.

All Industry Rate (AIR)

AIR is a fixed drawback rate notified by the Central Board of Indirect Taxes and Customs (CBIC) for each tariff item in the Drawback Schedule. These rates are determined annually based on average import duty incidence across the industry for each product category. The key advantages of AIR are simplicity and speed. You do not need to prove your actual import duty paid; the rate is applied automatically based on the tariff item of your exported goods.

However, AIR is an average. If your manufacturing process uses more imported inputs than the industry average, or if your inputs attract higher duty rates, the AIR will understate your actual duty incidence.

Brand Rate

Brand rate is a company-specific drawback rate calculated based on your actual customs duty paid on inputs consumed in the exported product. To claim brand rate, you must apply to the jurisdictional Commissioner of Customs with:

• Detailed input consumption records showing the quantity and type of imported inputs used per unit of exported product.
• Copies of bills of entry for each imported input, showing the actual customs duty paid.
• A chartered accountant certificate verifying the input-output norms and duty calculations.
• Manufacturing process flow documentation linking imported inputs to the finished export product.

RoDTEP Credit Ledger on ICEGATE

Unlike Duty Drawback, which is credited directly to your bank account, RoDTEP benefits are issued as electronic duty credits in your ICEGATE ledger. Understanding how this ledger works is essential for managing your export incentive cash flow.

How credits are generated

When you file a shipping bill with the RoDTEP declaration ticked, the system automatically calculates the RoDTEP amount based on the HS code, FOB value, and applicable rate from Appendix 4R. After the Export General Manifest (EGM) is filed and the Let Export Order (LEO) is confirmed, a scroll is generated and the credit is posted to your electronic credit ledger. This typically takes 7 to 15 days from the date of EGM filing.

Using credits for import duty payment

You can use your RoDTEP credits to pay basic customs duty on your own imports. When filing a bill of entry for imports on ICEGATE, you have the option to debit your RoDTEP credit ledger instead of paying duty in cash. The credits can be used to pay basic customs duty only. They cannot be used for IGST, compensation cess, or anti-dumping duty on imports.

Transferring credits (selling scrips)

RoDTEP credits are fully transferable. You can transfer any amount from your credit ledger to another IEC holder through the ICEGATE portal. In practice, this means you can sell your RoDTEP scrips on the open market. Buyers are typically importers who can use the credits to reduce their customs duty liability. The market price of scrips typically trades at 95-98% of face value, meaning a small discount for the buyer and near- full cash realisation for the seller.

Steps to manage your RoDTEP credit ledger

• Log into ICEGATE with your IEC credentials and navigate to the "RoDTEP Credit Ledger" section under Export Incentives.
• Check your available balance after each scroll is posted. Verify the amount matches your shipping bill FOB value and the applicable rate.
• To use credits for imports, select "Debit from RoDTEP Ledger" at the duty payment stage of your bill of entry.
• To transfer credits, use the "Transfer Credits" function. Enter the recipient's IEC and the amount to transfer. The transfer is instant once confirmed.

Common Mistakes to Avoid

After working with hundreds of exporters, these are the mistakes we see repeatedly. Each one either reduces the benefit amount or delays the claim entirely.

Mistake 1: Not claiming both schemes

The most expensive mistake is simply not knowing that RoDTEP and Duty Drawback can be claimed together. Many exporters (and even some customs brokers) operate under the assumption that these are either/or schemes. Every shipment where you claim only one scheme when you are eligible for both is money left unclaimed. Ensure your shipping bill has both the RoDTEP declaration and the Drawback claim ticked.

Mistake 2: Wrong HS code on the shipping bill

Both RoDTEP and Duty Drawback rates are determined by the HS code declared on the shipping bill. An incorrect HS code means either a wrong rate (which customs will catch during audit, potentially leading to recovery proceedings) or a lower rate than you deserve. Cross-verify your HS code with the Indian Trade Classification (ITC-HS) and ensure it matches the product description exactly. A single digit change in the 8-digit code can shift your RoDTEP rate from 3.5% to 0.5%.

Mistake 3: Missing the RoDTEP declaration on the shipping bill

RoDTEP claims must be declared at the time of filing the shipping bill. You cannot go back and add the RoDTEP declaration after the shipping bill has been processed and the goods have been exported. If your customs broker forgets to tick the RoDTEP box, that benefit is gone for that shipment. Make it a standard operating procedure to verify the RoDTEP declaration on every shipping bill before it is filed.

Mistake 4: Delayed BRC (Bank Realisation Certificate)

Both schemes require that export proceeds are realised (the money actually reaches your AD bank). While the initial credit or scroll may be generated on shipment, final settlement and some downstream benefits depend on BRC status. A delayed BRC (caused by late payment from the buyer, purpose code mismatches, or EDPMS issues) can hold up your incentive realisation and, in worst cases, trigger recovery proceedings if the RBI flags the shipment as unrealised.

Mistake 5: Claiming RoDTEP on ineligible exports

Not all exports are eligible for RoDTEP. Exports made under Advance Authorisation, DFIA, EPCG, or through Special Economic Zones (SEZs) are excluded from RoDTEP. Similarly, exports where the exporter has availed duty-free import of inputs under any other scheme cannot claim RoDTEP on the same shipment. Claiming RoDTEP on an ineligible shipment will result in denial of the claim and potential penalty proceedings. Verify eligibility before filing.

Impact on Export Pricing

Understanding your total incentive entitlement (RoDTEP + Duty Drawback) is critical for competitive export pricing. These incentives effectively reduce your cost of goods sold and should be factored into your FOB pricing strategy.

Consider the full picture: if your product has a manufacturing cost of Rs 100, and you are eligible for 3.5% RoDTEP and 2.5% Duty Drawback (Column B), your effective incentive is 6% of FOB. This means you can either price your exports 6% lower than your competition (improving competitiveness) or maintain your current pricing and improve margins by 6 percentage points.

The smart approach is a blend. Factor in a portion of the incentive (say, 3-4%) as a pricing advantage to win orders, and retain the remainder (2-3%) as margin improvement. The exact split depends on your industry's competitive dynamics and your buyer's price sensitivity.

Pricing checklist

• Calculate total incentive per shipment before quoting FOB prices to buyers. Include both RoDTEP (using your specific HS code rate from Appendix 4R) and Duty Drawback (Column B if claiming both).
• Account for the time value of money. Drawback credits arrive faster (direct bank transfer) than RoDTEP credits (which need to be sold if you do not import). Factor in a 1-2% discount for delayed realisation when pricing.
• Track incentive rates at least quarterly. RoDTEP rates and Drawback AIR can change mid-year through government notifications. A rate cut you did not anticipate can wipe out your pricing margin on existing orders.
• Do not factor incentives into pricing for products where eligibility is uncertain or where you use Advance Authorisation for inputs (which disqualifies RoDTEP).

Frequently Asked Questions

Can I claim both RoDTEP and Duty Drawback on the same export shipment?

Yes. RoDTEP and Duty Drawback are not mutually exclusive. They reimburse different types of taxes and can be claimed simultaneously on the same shipping bill. When claiming both, use the Duty Drawback Column B (lower) rate instead of Column A, because Column A includes an input tax component that would overlap with RoDTEP. Your combined benefit (RoDTEP + Column B) typically exceeds Column A alone.

What is the difference between Duty Drawback AIR and brand rate?

AIR is a fixed industry-average rate set by CBIC for each tariff item. It is easy to claim but may understate your actual duty incidence. Brand rate is company-specific, calculated from your actual import duty paid on inputs used in the exported product. It requires an application with detailed consumption records and a CA certificate. Apply for brand rate when your actual duty incidence exceeds the AIR by more than 20-25%.

How do I use RoDTEP scrips (credit ledger) on ICEGATE?

RoDTEP benefits are credited to your electronic credit ledger on ICEGATE, linked to your IEC. You can use the credits to pay basic customs duty on your own imports by debiting the ledger during bill of entry filing. You can also transfer credits to any other IEC holder through the portal, effectively selling your scrips on the open market. Scrips typically trade at 95-98% of face value.

What are the current RoDTEP rates for major export sectors?

Rates vary by HS code in Appendix 4R. Indicative ranges: Textiles 1.0-4.3%, Engineering goods 0.5-3.8%, Chemicals 0.5-3.0%, Pharmaceuticals 0.5-2.5%, Leather 1.0-4.0%, Agriculture 0.5-3.5%, Gems 0.5-1.5%, Handicrafts 1.0-5.0%. Many items also have per-unit caps. Verify your exact rate on the DGFT or ICEGATE portal before pricing your exports.

Related Guides

• RoDTEP Calculator. Calculate your exact RoDTEP benefit by HS code and FOB value with per-unit cap adjustments.
• Duty Drawback Guide. Complete guide to Duty Drawback. AIR, brand rate, claim process, and timelines.
• How to File a Shipping Bill on ICEGATE. Step-by-step process for shipping bill filing, including RoDTEP and Drawback declarations.
• Export Incentives Most Exporters Miss. Beyond RoDTEP and Drawback. Other government schemes that can improve your export margins.

Update history

• 2026-08-11 First published.