Merchandise Export Incentive scheme: What Exporters Should Know About Policy Transitions

India's export promotion framework has undergone significant changes over the years, influencing how businesses plan international shipments, manage costs and claim government benefits. One of the important developments has been the withdrawal of the Merchandise Exports from India Scheme (MEIS) and the introduction of alternative mechanisms to support Indian exporters. These changes have made it increasingly important for manufacturers, merchant exporters and international trading companies to understand the evolving policy landscape.

The Merchandise Export Incentive scheme was introduced to encourage Indian merchandise exports by providing duty credit incentives for eligible products and markets. However, the scheme was discontinued from January 2021, requiring exporters to adapt to a different export support structure.

For businesses operating in India's competitive international trade environment, understanding this transition is essential. This article by Exim Advisory explains the background of MEIS, the shift towards RoDTEP, the impact on exporters and the practical considerations businesses should address while navigating India's export incentive policies.

Understanding the Merchandise Exports from India Scheme (MEIS)

The Merchandise Exports from India Scheme was introduced under India's Foreign Trade Policy 2015–20. Its primary objective was to encourage merchandise exports by addressing certain infrastructural inefficiencies and associated costs that affected Indian businesses in international markets.

Under MEIS, eligible exporters received duty credit scrips calculated at notified rates on the realised Free on Board (FOB) value of eligible exports. Depending on the product and applicable conditions, the incentive generally ranged from 2% to 5%.

These scrips were transferable and could be used towards payment of specified customs duties and other eligible obligations under the prevailing policy provisions.

The scheme covered various merchandise categories, including agricultural products, engineering goods, textiles, chemicals and other eligible products. However, benefits depended on product classification, notified markets and applicable eligibility conditions.

For exporters, MEIS offered financial support that could improve pricing flexibility, reduce certain import-related costs and strengthen competitiveness in overseas markets.

Why Was the Merchandise Export Incentive Scheme Discontinued?

Although MEIS played an important role in India's export promotion strategy, its structure attracted international trade-related scrutiny.

A significant concern involved the World Trade Organization (WTO) Agreement on Subsidies and Countervailing Measures. The United States challenged certain Indian export incentive programmes, including MEIS, arguing that they were inconsistent with international subsidy disciplines.

Following these developments, India moved towards a revised export support framework.

MEIS was discontinued with effect from 1 January 2021. Exporters could no longer claim fresh MEIS benefits for exports made from that date under the withdrawn scheme.

It is important to understand that the transition was not simply a change of scheme name. The underlying approach to export support also changed. Instead of providing incentives primarily linked to export performance, the government introduced a mechanism focused on remitting embedded duties and taxes that remain unrefunded in exported products.

Transition from MEIS to the RoDTEP Scheme

The Remission of Duties and Taxes on Exported Products (RoDTEP) scheme became operational from 1 January 2021.

While RoDTEP is frequently discussed as the successor to MEIS, the two programmes operate on different principles. The Ministry of Commerce and Industry has clarified that RoDTEP is a duty remission mechanism and is not technically a replacement for MEIS.

The primary objective of RoDTEP is to refund eligible central, state and local duties, taxes and levies that are embedded in exported products but are not otherwise refunded or remitted.

These may include certain electricity duties, fuel-related taxes, mandi taxes and other eligible indirect levies, subject to the scheme's conditions.

Under RoDTEP, eligible exporters receive benefits at notified rates, generally calculated as a percentage of the FOB value, subject to applicable per-unit value caps.

The benefits are issued through transferable electronic duty credit scrips maintained in an electronic ledger through the customs system.

This approach supports the principle that domestic taxes and duties should not become an additional cost burden on goods entering international markets.

Latest RoDTEP Policy Developments Exporters Should Know

Policy transitions do not stop after a scheme is introduced. Exporters must also monitor subsequent notifications, rate revisions and eligibility changes.

An important development occurred in May 2025, when the government restored RoDTEP benefits for Advance Authorisation holders, Export-Oriented Units (EOUs) and Special Economic Zone (SEZ) units from 1 June 2025. These categories had previously faced a discontinuation of coverage after 5 February 2025.

Another significant update came in September 2025, when the government extended the scheme for eligible Domestic Tariff Area units, Advance Authorisation holders, SEZ units and EOUs until 31 March 2026.

In 2026, further policy decisions continued to shape the framework. Following subsequent notifications concerning rates and value caps, the government extended RoDTEP through 30 September 2026. On 2 October 2026, the Ministry of Commerce and Industry announced another extension through 31 December 2026.

Under the latest extension, the existing RoDTEP rates and value caps applicable on 30 September 2026 continue unchanged during the extended period.

This development is particularly relevant for exporters preparing shipment schedules and financial projections for the final quarter of 2026.

How the Policy Transition Affects Different Exporters

The shift from MEIS to RoDTEP has implications for businesses across different export categories.

1. Manufacturer Exporters

Manufacturers need to evaluate the duties and taxes embedded in their production processes. Understanding the applicable RoDTEP rate and value cap for their exported products can help them estimate potential remissions more accurately.

2. Merchant Exporters

Businesses operating under a Merchant Export Incentive scheme approach should understand that merchant exporters cannot automatically claim benefits simply because they purchase goods from domestic manufacturers and export them. Eligibility depends on the applicable scheme, exporter status, shipping bill declarations and prescribed conditions.

Merchant exporters should maintain clear purchase invoices, shipping documentation and supporting records to establish the transaction trail.

3. SEZ and EOU Exporters

The restoration and subsequent continuation of RoDTEP coverage for SEZ and EOU exports have been important developments. Businesses operating in these categories should verify the latest applicable provisions before claiming benefits.

4. Small and Medium Export Businesses

For MSMEs, export incentives can influence pricing decisions and working capital requirements. However, businesses should avoid treating anticipated incentive receipts as guaranteed income without checking the relevant eligibility conditions.

Important Compliance Considerations for Exporters

To manage the transition effectively, exporters should pay attention to the following areas:

• Correct HS Code Classification: Ensure that exported products are classified accurately under the applicable ITC (HS) codes. Incorrect classification can affect eligibility and incentive calculations.

• Shipping Bill Declarations: Provide the required RoDTEP declarations and scheme-related details while filing shipping bills.

• Rate and Value Cap Verification: Check the applicable Appendix 4R or Appendix 4RE, depending on the export category.

• Documentation: Maintain commercial invoices, shipping bills, export records and other supporting documents.

• Electronic Credit Ledger: Monitor the generation and credit of eligible e-scrips through the customs electronic system.

• Policy Updates: Regularly review DGFT notifications and customs instructions to identify changes in eligibility, rates and procedural requirements.

These measures help businesses minimise documentation errors, avoid unnecessary delays and maintain better control over export compliance.

MEIS vs. RoDTEP: Key Differences

Understanding the differences between the two frameworks helps exporters make informed business decisions.

Particulars	MEIS	RoDTEP
Introduction	Foreign Trade Policy 2015–20	Effective from 1 January 2021
Status	Discontinued	Extended until 31 December 2026
Objective	Encourage merchandise exports	Remit eligible unrefunded duties and taxes
Benefit mechanism	Duty credit scrips	Electronic duty credit scrips
Calculation	Notified percentage of eligible FOB value	Notified rate and applicable value cap
Policy approach	Export incentive	Duty and tax remission

The distinction is important because exporters should not assume that their previous MEIS benefits automatically translate into equivalent RoDTEP benefits.

How Exim Advisory Helps Businesses Navigate Export Policy Changes

Changing export policies can create uncertainty for businesses, particularly when incentive eligibility, documentation requirements and customs procedures are revised. Professional guidance can help exporters understand the implications before committing to international shipments.

Exim Advisory assists businesses with export-related compliance, incentive scheme assessments, documentation and regulatory procedures. Its advisory support can help manufacturers, merchant exporters and trading companies evaluate applicable export benefits and identify compliance requirements.

Businesses can benefit from assistance with:

• Reviewing eligibility under applicable export incentive policies.

• Understanding RoDTEP rates and relevant value caps.

• Assessing HS code classification and shipping bill requirements.

• Reviewing export documentation and incentive claims.

• Understanding DGFT notifications and policy amendments.

• Improving internal export compliance procedures.

A structured compliance approach helps businesses make better-informed export decisions while reducing the risk of avoidable procedural errors.

Conclusion

The transition from the Merchandise Export Incentive scheme to India's revised export support framework represents an important development in the country's international trade policy. Although MEIS has been discontinued, exporters continue to have access to eligible support through mechanisms such as RoDTEP.

Businesses should understand that the Export Incentive Scheme framework is subject to policy notifications, eligibility conditions and periodic revisions. Whether operating as a manufacturer or through a Merchant Export Incentive scheme strategy, exporters must evaluate the applicable provisions rather than relying on outdated assumptions.

Keeping track of Export Schemes and Incentives, maintaining accurate documentation and reviewing the latest DGFT notifications can help Indian businesses manage export costs and remain competitive in international markets.

With appropriate regulatory guidance from Exim Advisory, exporters can better understand policy transitions, strengthen compliance practices and plan their international trade operations with greater confidence.