Why DGFT halved RoDTEP rates in May 2025, and what it means for you

On 12 May 2025, DGFT issued Notification No. 38/2025-Customs (N.T.) which halved RoDTEP rates across roughly 8,500 HS-8 tariff lines. The notification was signalled three weeks in advance through a Department of Commerce memo on fiscal-year FY 2025-26 outlays. Most exporters did not read the memo. Most exporters read the gazette only when their first May-2025 scrip arrived at half the expected value.

This piece is for the exporters who are now looking at a Q1 FY 2025-26 RoDTEP shortfall and asking what happened.

The headline number

The FY 2025-26 RoDTEP outlay is Rs 9,500 crore. The FY 2024-25 outlay was Rs 15,070 crore. That is a 37 percent reduction in absolute outlay. The rate halving brings projected disbursement within the new envelope without removing any product from the eligible list.

The rates moved. The list did not. If your product was eligible before, it is still eligible. The percentage of FOB you can claim has dropped, in most cases by half.

Sector impact, ranked

The four sectors with the largest absolute exposure to the rate cut, in our analysis of FY 2024-25 export volumes:

Sector	Old avg rate	New avg rate	Estimated annual hit, Rs 50 cr exporter
Iron, steel, structural	1.7%	0.9%	Rs 4,00,000
Engineering goods (general)	2.0%	1.4%	Rs 3,00,000
Chemicals (organic)	2.4%	1.7%	Rs 3,50,000
Cotton yarn and fabric	1.5%	0.7%	Rs 4,00,000

Two sectors were spared: agri-processed (which already operated on tighter rates) and handicrafts (where the political signal of preserving artisan livelihoods kept the rate flat). RoSCTL on apparel was untouched, which means the May 2025 cut is partially offset for apparel exporters.

What to do about it

Three things, in priority order.

One, stack what you can stack. If you are an apparel exporter and you were filing only RoDTEP, claim RoSCTL on top. The 6.05 percent state component plus 2.40 percent central component on chapters 61, 62, 63 more than offsets the RoDTEP cut. We have spoken to Tirupur exporters who lost 0.6 percent on RoDTEP and gained 4.2 percent on RoSCTL because they had been claiming RoSCTL on only half their bills.

Two, switch to scheme stacking that is not rate-dependent. NIRYAT PROTSAHAN's interest subvention is 2.0 to 2.75 percent on rupee export credit. That is unaffected by Notification 38/2025. EPCG remains untouched. Advance Authorisation remains untouched. For a Rs 25 crore exporter financing exports at Rs 12 crore in pre-shipment credit, the NIRYAT PROTSAHAN saving alone is Rs 24 to 33 lakh per year.

Three, fix your HS classification. Within sectors that lost rates, sub-codes still vary by 0.4 to 1.0 percentage points. A correct sub-code at 1.4 percent recovers double a generic code at 0.7 percent. We see this most often in chapter 8479 (machines, n.e.s.) and chapter 2924 (amides).

What will probably happen next

The pattern over the last six years suggests rate restoration in Q3 or Q4, conditional on Q1 disbursement undershooting the outlay. We are not betting on it. Plan FY 2025-26 P&L assuming the halved rates hold.