Sharp Cut in RoDTEP Will Hit MSME Exports; CICU Seeks Immediate Restoration from Government

Ludhiana: The Chamber of Industrial & Commercial Undertakings (CICU) has expressed serious concern over the recent reduction in benefits under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme announced in the Union Budget 2026–27 and subsequent notification issued by the Directorate General of Foreign Trade (DGFT).
As per the Budget documents, the allocation under the RoDTEP scheme has been reduced from ₹18,232.50 crore in FY 2025–26 to ₹10,000 crore in FY 2026–27. Further, DGFT Notification No. 60 dated 23 February 2026 has restricted the RoDTEP rates to 50% of the earlier notified rates and value caps with immediate effect.
CICU stated that the combined impact of reduction in budget allocation and rate cut will lead to an effective erosion of nearly 65–75% of the benefit available to exporters. The Chamber highlighted that the textile sector, which is largely dominated by MSMEs and operates on extremely thin margins, will be the worst affected. Exporters are already facing high logistics cost, expensive power tariffs, elevated interest rates and intense competition from countries like Bangladesh, Vietnam and China. The sudden reduction in RoDTEP support may render many export orders commercially unviable.
Industry representatives informed that several exporters have already started receiving price revision requests from foreign buyers and some orders are at risk of shifting to competing countries. Since the RoDTEP scheme compensates embedded taxes not refunded under GST, the reduction effectively means exporting taxes, thereby weakening India’s competitiveness in global markets.
CICU emphasized that the textile sector is one of the largest employment generators, particularly for semi-skilled and women workers, and any decline in exports could directly impact livelihoods and manufacturing output. The Chamber warned that frequent and abrupt policy changes also affect buyer confidence and long-term sourcing commitments from India.
The Chamber has submitted a detailed representation to the Prime Minister’s Office, Ministry of Commerce & Industry, Ministry of Finance, Ministry of MSME and DGFT requesting immediate restoration of the earlier RoDTEP rates and adequate budget allocation, especially for labour-intensive MSME sectors.
CICU urged the Government to maintain a stable and predictable export incentive framework to support the national objectives of Make in India, Atmanirbhar Bharat and growth in exports.