Examine the balance between fiscal constraints and export promotion in India's trade policy.

India's trade policy follows the principle that "taxes should not be exported". Refunding those taxes, however, costs the exchequer. On 30 September 2026, RoDTEP and RoSCTL were extended by only three months, to 31 December 2026, with rates unchanged [1]. That short extension shows how uneasily the two goals sit together.

Why export promotion needs fiscal support

• Tax neutrality: Levies such as fuel VAT, electricity duty and mandi tax fall outside GST. RoSCTL rebates these embedded state and central levies to keep apparel and made-ups competitive [2].
• WTO compliance: A WTO panel ruled that MEIS was a prohibited export subsidy (DS541) [3]. Since then, refunding taxes that exporters actually bear has been India's WTO-defensible tool.
• Employment: Labour-intensive textile and MSME exporters depend on these rebates to stay in global markets.

How fiscal constraints bite

• Shrinking allocation: Budget 2026-27 provides ₹10,000 crore for RoDTEP, a sharp cut from the previous year [4].
• Abrupt rate changes: From 23 February 2026, benefits were capped at 50% of notified rates. Full rates came back on 23 March 2026 because of West Asia freight disruptions [5].
• Short tenures: In 2023, RoDTEP was extended only until June 2024 [6]. It is now being extended one quarter at a time [1]. Exporters cannot price long-term contracts on that basis.
• Implication: A refund the exporter is owed turns into a budget-capped, discretionary benefit. Exporters stop counting on it when they set prices, and the scheme loses its purpose.

The legitimate fiscal concern

• The government must verify that rebates match the taxes actually embedded in each product. Paying more than that is costly, and it also exposes the scheme to challenge as a prohibited subsidy [3].
• A flat cut across all products, however, penalises accurate claimants along with the rest.

Way forward

• Give the schemes a multi-year tenure, conditional on exporters filing the annual RoDTEP return.
• Recalibrate rates product by product using data, instead of cutting them across the board.
• Converge RoDTEP and RoSCTL under the Export Promotion Mission, as the budget proposes [4].
• Announce in advance the rules for crisis support, such as the West Asia response [5].
• In the long run, the GST Council should bring fuel and electricity levies into GST. That shrinks what these schemes must refund.

Fiscal prudence and export promotion are complementary. Calibrated, data-backed and predictable remission protects the budget, keeps India WTO-compliant and makes its exports more competitive. This supports the goal of raising India's share of global trade under Viksit Bharat 2047.