Customs authorities are seeking recovery of RoDTEP export benefits previously granted to Duty-Free Import Authorisation (DFIA) holders. This move threatens the working capital of small-scale exporters who claimed these funds following a 2024 policy update. Exporters are now seeking urgent intervention from the government to resolve the administrative confusion.
Exporters operating under the Duty-Free Import Authorisation (DFIA) scheme are facing financial uncertainty after receiving recovery notices from customs authorities. These notices demand the repayment of RoDTEP (Remission of Duties and Taxes on Exported Products) benefits that were already processed and credited to these businesses. The conflict stems from differing interpretations of eligibility rules by tax authorities.
Policy Changes and Implementation
The RoDTEP scheme was introduced to help Indian exporters remain competitive by refunding hidden taxes and duties embedded in their products. In March 2024, the government updated the eligibility criteria to include products manufactured under the DFIA and Advance Authorisation schemes. Following this change, many exporters filed claims for these benefits, which were initially approved and disbursed by the customs department. However, recent notices, including those from the Directorate of Revenue Intelligence, are now questioning these payouts and asking for the funds to be returned.
Financial Impact on Small Exporters
The All India Importers and Exporters Association (AIIEA) has raised concerns regarding how this recovery affects smaller firms. While the government disbursed over ₹34,800 crore under the RoDTEP scheme in the last two fiscal years, the amount currently in dispute from DFIA exporters is estimated at approximately ₹52 crore. Although this represents a small portion of the total scheme budget, trade representatives argue that the sudden demand for repayment creates a significant liquidity crunch for MSME exporters. These businesses have already used the funds for operational needs, and the recovery notices could disrupt their cash flow and ability to maintain ongoing export commitments.
Parity Among Export Schemes
Exporters argue that DFIA users incur the same types of unreimbursed costs as those operating under other programs, such as Special Economic Zones (SEZs) or Export Oriented Units (EOUs). While textile exporters receiving benefits under the RoSCTL scheme remain unaffected, the current ambiguity surrounding DFIA and non-textile tariff items has created an uneven playing field. The industry association has approached the Ministry of Finance and the Ministry of Commerce and Industry to advocate for a clarification that would protect these exporters from retroactive penalties.
The next major monitorable for the industry will be the formal response from government ministries regarding these recovery notices. Exporters are waiting to see if the authorities will issue a clarification to waive these demands or if they will continue to enforce the recovery of the previously distributed benefits.