Zero-rating of exports is central to India's export-incentive architecture after the WTO challenge to the MEIS. Examine how RoSCTL and RoDTEP operationalise this principle.

Zero-rating means exports should leave India free of domestic taxes. Any tax embedded in an export is either exempted or refunded. In 2019 a WTO panel (DS541) held India's MEIS to be a prohibited export subsidy [1]. India then rebuilt its export incentives on zero-rating, so they refund taxes already paid instead of rewarding exports.

The MEIS lesson: refund, not reward

• The panel found that MEIS scrips were a transfer of funds contingent on export performance, which violates SCM Agreement Articles 3.1(a) and 3.2 [1].
• Remission schemes return only embedded, unrefunded taxes. This keeps them on the right side of the subsidy line [2].

How RoSCTL operationalises zero-rating

• The Ministry of Textiles has run it since 7 March 2019 [2]. It covers apparel (ITC-HS Ch. 61, 62) and made-ups (Ch. 63) [4].
• It rebates State and Central taxes and levies not refunded by any other mechanism [2]. It works in addition to Duty Drawback, not as a replacement [5].
• The benefit comes as a Duty Credit Scrip, which can be used to pay basic Customs duty on imported machinery and inputs [5].
• In 2025–26 it reached 15,400+ exporters in 444+ districts, mostly MSMEs [3].

How RoDTEP operationalises zero-rating

• It rests on the principle that "taxes and duties should not be exported". It covers 8,555 tariff lines, and claims are fully digitised [6].
• It covers textiles outside Ch. 61–63, such as yarn and fabric. Together the two schemes span the whole textile value chain [2].

Gaps in operationalisation

• Rate calibration: the schemes are WTO-compatible only if rates match the taxes actually embedded. The RoSCTL rate review depended on industry data due by 15.04.2025 [7].
• Predictability: RoSCTL has had short extensions, to 30.09.2026 and now to 31.12.2026, while it awaits 16th Finance Commission-cycle approval [2][3]. The Cabinet itself stressed a "stable policy regime" because textile orders are placed long before delivery [4].
• Volatility: RoDTEP rates and value caps had to be restored from 23 March 2026 after West Asia trade disruption [8].
• Fragmentation: one textile chain runs on two schemes with two rate schedules.

RoSCTL and RoDTEP apply zero-rating by refunding real tax costs, the distinction MEIS lacked. Next steps: approve both for the full 16th Finance Commission cycle, publish data-backed rates and review them regularly. This would give MSME exporters stable, WTO-proof support and advance SDG 8 (decent work and economic growth).