Export Promotion Schemes 2026: MEIS, RoDTEP, and Duty Drawback Updated

Export promotion schemes 2026 RoDTEP duty drawback present a significantly updated landscape for Indian exporters heading into FY 2026-27. The old MEIS (Merchandise Exports from India Scheme) is gone, replaced by WTO-compliant remission mechanisms. Drawback rates are revised annually. EPCG zero-duty benefits are alive under the Foreign Trade Policy 2023. And RoDTEP e-scrips are now a mainstream liquidity tool for exporters who know how to use them. This article maps all the current schemes, rates, claim procedures, and compliance requirements so exporters at every stage, from the first IEC holder to an established manufacturer under EPCG, can plan FY 2026-27 without gaps.

Why MEIS Was Discontinued and What Replaced It

Understanding the current incentive landscape requires a clear picture of why the scheme most exporters grew up with no longer exists. MEIS was a straightforward benefit: the government issued duty credit scrips calculated as a fixed percentage of the free-on-board (FOB) value of exports across three rate slabs of 2%, 3%, and 5%. Simple to compute, easy to budget, and administratively light.

The problem was WTO-compatibility. The WTO Appellate Body ruling in DS541 (India: Export-Related Measures) found that MEIS, together with several other Indian export subsidy programmes, constituted prohibited export subsidies under the Agreement on Subsidies and Countervailing Measures (ASCM). Because India's per-capita GNP had crossed the threshold at which such programmes must be phased out, MEIS could not continue in its original form.

The Government of India discontinued MEIS for exports made on or after 1 January 2021. Exporters who had shipped before that date could still file MEIS claims within the applicable time limits, and valid scrips issued before cutoff remained usable within their validity. The replacement architecture rested on a different philosophical basis: rather than paying a fixed export incentive, the government would remit only actual embedded taxes that exporters cannot recover through any other mechanism (not VAT/GST, not drawback, not CENVAT). That is the foundation of RoDTEP.

RoDTEP: The WTO-Compliant Core of Export Remission in 2026

RoDTEP (Remission of Duties and Taxes on Exported Products) is the most significant structural shift in Indian export incentive architecture in the last two decades. Unlike MEIS, which paid a percentage of FOB value, RoDTEP remits the incidence of embedded central and state taxes that remain in the supply chain cost of exported goods but cannot be recovered through existing mechanisms. Think mandi tax, electricity duty on manufacturing, stamp duty on domestic procurement, fuel duties on transport, and similar levies that are neither GST-recoverable nor captured by duty drawback.

Rate Schedule and Tariff Coverage

RoDTEP rates are notified product-wise through Customs (N.T.) Notification and DGFT Policy Circular. The current schedule covers over 8,500 tariff lines at the 8-digit HS level. Rates vary significantly by product category. Labour-intensive sectors such as textiles, garments, footwear, handicrafts, and agricultural products tend to carry relatively higher rates because their supply chains embed more state-level levies. Capital-intensive or technology exports may carry lower rates where the embedded unrecoverable tax incidence is smaller.

For FY 2026-27, exporters should verify the applicable rate for their HS code through:

• The DGFT portal at dgft.gov.in under "Export Promotion" (Policy Notifications)
• The ICEGATE portal at icegate.gov.in under Customs Tariff / Drawback-RoDTEP lookup
• The latest Customs (N.T.) Notification issued by the Ministry of Finance for the current financial year

How the Claim Process Works

The RoDTEP claim mechanism is integrated into the shipping bill filing process, which makes it operationally different from MEIS scrip claims that required a separate application to DGFT.

1. At the time of filing the shipping bill on ICEGATE, the exporter declares RoDTEP eligibility (Column: "Claim RoDTEP: Yes/No")
2. After customs examination, assessment, and the Let Export Order (LEO), the system automatically computes the RoDTEP amount based on the declared HS code, FOB value, and applicable rate
3. The computed amount is credited to the exporter's ICEGATE e-scrip ledger (also called the Duty Credit Ledger)
4. The exporter receives a transferable e-scrip with a unique scrip number, which can be used to pay Basic Customs Duty (BCD) on imports or transferred to any other importer

Scrip Utilisation and Transfer

RoDTEP e-scrips can be used for two purposes:

• Own use: The exporter uses the e-scrip to pay BCD on any imported goods
• Transfer: The exporter transfers the e-scrip to another importer through the ICEGATE portal, effectively monetising the benefit

The scrip transfer mechanism creates a secondary market. For exporters who are not regular importers, selling scrips provides immediate cash value. The market rate for RoDTEP scrips typically reflects a small discount to face value depending on demand from importers and prevailing BCD levels on the goods they import.

Duty Drawback: All Industry Rates and Brand Rate for FY 2026-27

Duty Drawback is the oldest and most established export promotion tool in India, predating both MEIS and RoDTEP by decades. Governed by Sections 74 and 75 of the Customs Act, 1962 and administered under the Customs and Central Excise Duties and Service Tax Drawback Rules, 2017, drawback refunds the customs and central excise duties embedded in the cost of exported goods.

There are two tracks: the All Industry Rate (AIR) and the Brand Rate. Understanding which track applies to your product is essential before filing.

All Industry Rate (AIR) Drawback

The AIR is a standardised drawback rate determined by the Ministry of Finance (Drawback Committee) based on average input costs, duty incidence across the industry, and export FOB values. It is notified annually (typically at the start of the financial year) via a Customs (N.T.) Notification. The AIR schedule specifies:

• A drawback rate as a percentage of FOB export value
• A maximum cap per unit (to prevent windfall gains on high-value goods)
• A flag indicating whether the rate covers "customs only" (OC) or "customs and central excise" (CC)

For FY 2026-27, the revised AIR schedule was notified by CBIC. Products commonly exported by MSME and manufacturing sectors, such as textiles, leather goods, engineering products, and chemical derivatives, carry specific rates. Exporters should download the current AIR schedule from the CBIC website or verify through their customs broker.

Brand Rate Drawback: When AIR Is Insufficient

Where the AIR does not adequately represent the actual duties paid by a particular exporter, the Brand Rate mechanism under Rule 6 of the Drawback Rules, 2017 allows the manufacturer to apply for a customised rate. Brand Rate applications are filed with the jurisdictional Customs Commissioner and require:

• Detailed cost statements showing the actual duty incidence on inputs
• Manufacturing process description and standard input-output ratios
• Import duty payment records (Bill of Entry copies with duty assessment)
• Financial and production records for the claim period

Brand Rate is particularly relevant for exporters of specialised machinery, pharmaceuticals, and bespoke engineering products where standard input norms diverge significantly from actual production reality.

Section 74 Drawback: Re-Export of Imported Goods

If a business imports goods on payment of customs duty and subsequently re-exports them without significant processing, Section 74 of the Customs Act, 1962 provides a drawback of up to 98% of the customs duty originally paid. The key conditions are:

• The goods must be identifiable as the same imported goods
• Re-export must happen within 2 years of original importation (extendable by the Commissioner on application)
• Goods should not have been put to significant use after import (Customs may reduce the 98% rate for used goods)

Claiming Duty Drawback via the Shipping Bill

The drawback claim is integrated into the export shipping bill process on ICEGATE. The exporter must declare the correct DBK code (Drawback Export Data code corresponding to the Customs Tariff Item) on the shipping bill. After LEO, the drawback amount is credited directly to the exporter's designated bank account through the Electronic Data Interchange (EDI) system. The process timeline is typically:

EPCG Scheme 2026: Zero Duty on Capital Goods

The Export Promotion Capital Goods (EPCG) scheme under Chapter 5 of the Foreign Trade Policy 2023 enables Indian manufacturers and service providers to import capital goods at zero basic customs duty for use in export production. It is one of the most capital-efficient tools available to exporters planning production capacity expansion.

How EPCG Works

The scheme is structured around a deferred obligation model. The government allows zero-duty capital goods import today in exchange for a commitment to export more tomorrow. Specifically:

• Duty saved on the imported capital goods is quantified at the time of EPCG authorisation
• The exporter must fulfil an export obligation equal to 6 times the duty saved
• The export obligation must be completed within 6 years from the date of EPCG authorisation
• An Average Annual Export Obligation (AAEO) based on the preceding 3-year average must also be maintained throughout

Who Can Apply for EPCG

EPCG is available to manufacturers, merchant exporters tied to specific manufacturers, and service providers recognised under FTP. Agriculture Sector and Small Scale Industry (SSI) units have reduced export obligation norms and specific provisions under Para 5.04 of FTP 2023. Capital goods eligible for zero-duty import include machinery, equipment, tools, jigs, fixtures, moulds, dies, and technologically upgraded equipment.

Post-Import Obligations and EODC

After importing under EPCG, the holder must:

• Install and put the capital goods to use for export production within 6 months of import
• Submit Annual Performance Statements (APS) to the relevant DGFT Regional Authority every year
• Maintain a register of export obligations fulfilled under the EPCG authorisation
• File for an Export Obligation Discharge Certificate (EODC) once the full obligation is fulfilled

Without EODC, the customs bond and bank guarantee lodged at import remain valid and enforceable. Default on the export obligation triggers customs duty recovery with interest at 15% per annum on the duty amount, compounded from the date of original import.

Advance Authorisation Scheme: Duty-Free Input Imports

The Advance Authorisation (AA) scheme under Chapter 4 of the Foreign Trade Policy 2023 allows manufacturers to import raw materials, components, and inputs without paying basic customs duty, additional customs duty, or anti-dumping duty, provided those inputs are physically incorporated in the final exported product (allowing for notional wastage as per SION norms).

SION Norms and Self-Declaration

The scheme operates around Standard Input Output Norms (SION), which define the input-output relationship for thousands of export products. SION is maintained by the DGFT Norms Committee. If a product has a notified SION, the authorisation is issued accordingly. If no SION exists, the exporter may apply with self-declared norms pending SION fixation. Customs examines the physical realisation during scrutiny.

Key Parameters

Advance Authorisation is typically more suitable for established manufacturing exporters with predictable input-output ratios. For new product lines or custom engineering orders, the lack of a notified SION can slow the authorisation process. In those cases, a Brand Rate Advance Authorisation (with self-declared norms) requires additional scrutiny time.

Comparison of Export Promotion Schemes: FY 2026-27

To make scheme selection decisions easier, the table below summarises the current operational parameters of each scheme side by side.

GST and Export Schemes: How Zero-Rating and Remission Interact

A common source of confusion for exporters is the relationship between GST zero-rating and the duty remission schemes described above. They operate on separate layers of the tax system and target different cost components.

GST Zero-Rating Under Section 16 of the IGST Act, 2017

Exports are "zero-rated supplies" under the GST framework. This means:

• No GST is charged on the export supply itself
• The exporter can recover all input GST (IGST, CGST, SGST) paid on inputs, input services, and capital goods through refunds or input tax credit utilisation
• Exporters may either (a) export under LUT (Letter of Undertaking) and claim ITC refund, or (b) pay IGST on export and claim refund of IGST paid

Where RoDTEP and Drawback Fit In

GST zero-rating handles the GST layer. But exporters also pay taxes that are not part of GST, such as electricity duty, mandi cess, stamp duty on procurement contracts, fuel and motor spirit levies used in factory operations, and minor state levies. These do not appear in the GST return as recoverable credits. RoDTEP is designed specifically to remit this non-GST embedded cost layer. Similarly, Duty Drawback (AIR or Brand Rate) addresses the customs duty on imported inputs and the residual central excise on petroleum inputs that cannot be recovered through GST credits.

IEC, MSME, and Startup Exporters: Accessing Schemes

The entry point for every export promotion scheme is a valid Import Export Code (IEC). Without IEC, no DGFT authorisation, no drawback claim, and no RoDTEP e-scrip can be processed. IEC is issued by DGFT under Section 7 of the Foreign Trade (Development and Regulation) Act, 1992 as a permanent 10-digit code linked to the PAN of the entity. There is no annual renewal; IEC remains valid until surrendered. For new exporters and businesses entering the export market for the first time, IncorpX provides assistance for IEC registration with DGFT.

MSME-Specific Export Benefits

MSMEs registered under the MSMED Act, 2006 (now through the Udyam Registration portal) access export benefits through multiple channels:

• Priority sector credit for export financing at concessional rates
• ECGC (Export Credit Guarantee Corporation) cover for credit risk and export payment default insurance at subsidised premiums
• EPCG special provisions under Para 5.04 of FTP 2023 for capital goods at reduced export obligation thresholds
• Market Development Assistance (MDA) scheme from the Ministry of Commerce for participation in international trade fairs

For businesses not yet registered under MSME, the Udyam portal (udyamregistration.gov.in) provides free online registration. IncorpX provides assistance for MSME Udyam registration to ensure the certificate is correctly obtained with the right NIC codes and investment/turnover classification.

Startup Exporters Under DPIIT Recognition

DPIIT-recognised startups under the Startup India initiative benefit from faster EPCG processing, reduced compliance burden, and access to the Government e-Marketplace (GeM) and export credit schemes. Startups that export software services or technology products often find the Advance Authorisation pathway less relevant (since services use fewer physical inputs) but should actively claim RoDTEP on any physical goods exports and leverage EPCG for production equipment. For DPIIT startup recognition, IncorpX provides assistance through the startup registration process.

Private Limited Companies and Export Compliance

A significant portion of medium and large exporters operate as private limited companies or LLPs. The company structure affects export scheme access in one important way: GST registration, IEC, and DGFT login must all be linked to the same PAN. For a private limited company, the PAN is the company PAN (not the promoter's PAN), and the GST registration and IEC must both reflect the company as the legal entity.

When the company's export scale justifies EPCG or Advance Authorisation, the Board should pass formal resolutions authorising the key managerial personnel to file DGFT applications and sign export obligation undertakings, since these create binding legal commitments on the company. IncorpX provides assistance for private limited company registration for businesses planning to structure their export operations through a corporate vehicle from the start.

FY 2026-27 Action Checklist for Indian Exporters

Given the number of scheme components in play, it helps to have a structured action plan. Here is a quarter-wise approach for exporters managing FY 2026-27 compliance:

Q1 (April to June 2026)

• Download the revised AIR Drawback schedule notified for FY 2026-27 and verify rates for all HS codes in your product range
• Check the latest RoDTEP rate notification on DGFT portal for your tariff lines
• File any pending EODC applications for EPCG or Advance Authorisations where export obligations were fulfilled in FY 2025-26
• Submit Annual Performance Statements (APS) for all active EPCG authorisations (typically due 30 April)

Q2 (July to September 2026)

• Review RoDTEP e-scrip ledger balances on ICEGATE and plan utilisation or transfer to avoid expiry
• Verify that drawback refunds for Q1 exports have been credited; follow up with Customs EDI for any pending credits
• Assess whether any new capital goods requirements justify fresh EPCG authorisation applications
• Ensure GST LUT renewal is filed if your LUT validity falls in this period (LUT is valid for one financial year)

Q3 and Q4 (October 2026 to March 2027)

• Compute year-to-date export obligation fulfilment under each active EPCG authorisation against the AAEO threshold
• Plan any additional exports required to avoid shortfall in export obligation fulfilment before FY end
• Reconcile drawback claims filed versus credits received; identify any unclaimed drawback shipping bills approaching the 3-month filing window
• Prepare documentation for MEIS residual claim disposition if any valid pre-2021 scrips are nearing expiry

Common Errors and How to Avoid Them

Export scheme benefits are frequently left on the table or recovered through adjudication proceedings due to avoidable documentation and procedural errors. The following are the most common failure points:

• Incorrect DBK code on shipping bill: The drawback claim code must match the HS classification of the exported goods. A mismatch leads to rejection or incorrect drawback rate application. The customs broker must verify this against the current year's AIR schedule before filing.
• Missing RoDTEP declaration: If the exporter forgets to declare RoDTEP eligibility on the shipping bill, the system does not auto-add the benefit after LEO. Amendment applications at this stage face scrutiny and delay.
• EPCG installation default: Capital goods imported under EPCG must be installed and put to use within 6 months. Failure to do so and failure to report it to DGFT is treated as a default on the authorisation terms.
• APS filing lapse: Missing Annual Performance Statements for EPCG is the single most common cause of DGFT show-cause notices to EPCG holders. Maintain a calendar reminder at the start of each financial year.
• Claiming drawback and RoDTEP on the same duty component: The system is designed to prevent this, but errors in declaration can create overclaiming issues that attract Customs scrutiny under Section 28 of the Customs Act.
• Advance Authorisation input shortfall: If actual inputs imported fall short of the SION-based entitlement, the exporter must ensure that export obligation is still fully met from in-house duty-paid inputs. Any shortfall in value addition or obligation fulfilment must be regularised before EODC filing.