Duty drawback
Topic: International Trade Policy, WTO and Intellectual Property · NCERT: Beyond NCERT
Meaning
Duty drawback is a refund of customs and other duties paid on imported inputs that are used to make goods for export. Countries export goods, not taxes, so exports should be "zero-rated", which means no domestic duty stays built into their price. The refund keeps exporters competitive abroad. Remission schemes like RoDTEP and Advance Authorisation work on the same idea.
Example
An Indian garment maker imports fabric and pays ₹5 lakh in customs duty. The finished shirts are exported, so the government refunds that ₹5 lakh and the shirts reach foreign buyers without Indian duty in their price.
Don't confuse with
- Export subsidy: this is an extra payment or benefit tied to export performance, and it is banned under WTO rules for most countries. A duty drawback only returns taxes already paid, so it is WTO-compatible.
Related concepts
- Tariff
- Ad valorem tariff
- Specific tariff
- Compound tariff
- Mixed tariff
- Export duties
- Tariff escalation
- Tariff peak
- Effective rate of protection
- Bound tariff rate