What Changes in Export Operations Mean for the Merchant Export Incentive scheme

Introduction

India's export sector is undergoing significant changes as businesses adapt to evolving international trade regulations, changing buyer expectations, rising logistics costs, digital documentation requirements, and government export promotion policies. For merchant exporters, these developments have made it increasingly important to understand how operational changes influence export profitability and access to government benefits.

The Merchant Export Incentive scheme is a commonly used term when discussing financial support available to merchant exporters. However, businesses must understand the distinction between the earlier Merchandise Exports from India Scheme (MEIS) and the export remission framework currently applicable in India. MEIS was discontinued, and the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme became an important mechanism for addressing embedded taxes and duties on exports.

As export operations become more technology-driven and compliance-focused, merchant exporters must review their processes, documentation, and incentive eligibility to remain competitive in international markets.

Understanding the Merchant Export Incentive Scheme and Its Evolution

The earlier Merchandise Exports from India Scheme (MEIS) was introduced under India's Foreign Trade Policy 2015–20. Its primary objective was to encourage exports by providing duty credit scrips to eligible exporters of notified products to specified markets.

These incentives helped businesses manage certain export-related costs and improve the competitiveness of Indian products internationally. Both manufacturer exporters and eligible merchant exporters could benefit, subject to the applicable policy conditions.

However, MEIS was discontinued with effect from 1 January 2021 following concerns regarding its compatibility with World Trade Organization (WTO) rules.

The government subsequently introduced RoDTEP to address the remission of embedded central, state, and local duties and taxes that were not refunded through other mechanisms.

Therefore, businesses searching for the current Merchant Export Incentive scheme should understand that MEIS is a discontinued scheme rather than an active incentive programme. Exporters must evaluate the currently applicable benefits under RoDTEP and other relevant export promotion schemes.

1. Greater Focus on Export Documentation and Digital Compliance

One of the most significant changes in export operations is the increasing reliance on digital documentation and electronic compliance systems.

Merchant exporters must maintain accurate records of commercial invoices, packing lists, shipping bills, bills of lading, certificates of origin, and other documents required for international shipments.

Incorrect product descriptions, HS code classification errors, mismatched invoice details, or incomplete declarations can create difficulties during customs clearance and incentive processing.

The Foreign Trade Policy (FTP) 2023 further emphasises technology-enabled processes, transparency, and simplified procedures.

For merchant exporters, this means maintaining consistent information across customs declarations, GST records, banking documents, and export invoices. Better documentation also helps businesses establish their eligibility for applicable Export Incentive Scheme benefits.

2. Changes in RoDTEP and Their Impact on Merchant Exporters

The introduction of RoDTEP marked an important change in India's export incentive structure.

Unlike MEIS, which provided duty credit scrips based on notified export categories and destinations, RoDTEP focuses on refunding eligible embedded taxes and duties that are not otherwise refunded.

These may include certain state and central levies associated with the production and distribution of exported goods.

The scheme has also undergone policy changes during 2026.

On 23 February 2026, the government rationalised RoDTEP rates and value caps to 50% of their existing levels. Subsequently, through Notification No. 66/2025-26 dated 23 March 2026, the government restored the earlier rates and value caps applicable before the reduction.

More recently, the government extended RoDTEP until 31 December 2026 through Notification No. 41/2026-27 dated 30 September 2026. The applicable rates and value caps as of 30 September 2026 continue unchanged during the extended period.

This development provides exporters with greater clarity when preparing their pricing and shipment plans. However, businesses must verify the applicable product classification, rate, value cap, and eligibility conditions before calculating expected benefits.

3. Increasing Importance of Accurate HS Code Classification

Product classification plays a critical role in international trade because export incentives, customs requirements, and regulatory obligations are often linked to the applicable HS code.

A merchant exporter dealing in multiple product categories must ensure that every product is classified correctly under the relevant customs tariff.

Incorrect classification can result in:

  • Incorrect calculation of applicable export benefits.

  • Delays during customs clearance.

  • Documentation discrepancies.

  • Potential rejection or recovery of incorrectly claimed benefits.

  • Additional compliance requirements.

For example, two products that appear commercially similar may fall under different HS codes and have different RoDTEP rates or eligibility conditions.

Businesses should regularly review product classifications against the latest DGFT notifications and applicable customs requirements.

4. Rising Logistics Costs Are Changing Export Planning

International logistics has become an important consideration for Indian merchant exporters. Freight rate fluctuations, shipping route disruptions, container availability, insurance costs, and longer transit periods can directly influence export margins.

Developments in West Asia during 2026 have highlighted how geopolitical disruptions can affect shipping schedules and transportation costs.

The government's decision to restore RoDTEP rates in March 2026 also reflected the need to support exporters facing increased freight costs and maritime trade disruptions.

Merchant exporters should therefore consider logistics expenses while negotiating international contracts. Pricing decisions should account for freight, insurance, port charges, handling expenses, and possible shipment delays.

A well-planned logistics strategy can help businesses protect their profit margins while maintaining competitive overseas pricing.

5. Exploring Multiple Export Schemes and Incentives

Relying on a single government benefit is not always a suitable strategy for merchant exporters. Businesses should evaluate different Export Schemes and Incentives according to their product categories, business activities, and export requirements.

Some important export promotion mechanisms include:

RoDTEP Scheme: Provides remission of eligible embedded duties and taxes on notified exported products.

Advance Authorisation Scheme: Allows eligible duty-free imports of inputs that are physically incorporated into export products, subject to prescribed conditions and export obligations.

Export Promotion Capital Goods (EPCG) Scheme: Facilitates the import of eligible capital goods at concessional or zero customs duty, subject to specified export obligations.

Duty Free Import Authorisation (DFIA): Provides eligible exporters with duty-free import authorisation for inputs used in exported products, subject to applicable conditions.

These schemes serve different purposes and are not automatically available to every exporter. Merchant exporters should assess their eligibility and understand the compliance responsibilities associated with each programme.

6. Better Financial Planning and Record Management

Changes in export operations also require businesses to improve financial planning. Merchant exporters must carefully calculate procurement costs, transportation expenses, customs-related charges, foreign exchange fluctuations, and payment collection timelines.

Proper reconciliation of shipping bills, export invoices, bank realisation details, and incentive-related records can help reduce discrepancies.

Businesses should also monitor export proceeds and comply with applicable foreign exchange regulations. Maintaining organised financial records makes it easier to identify eligible benefits, respond to departmental queries, and prepare for compliance reviews.

For small and medium-sized merchant exporters, adopting structured accounting and export documentation practices can significantly improve operational efficiency.

7. Why Professional Export Compliance Support Matters

As export regulations and incentive mechanisms continue to evolve, businesses may find it difficult to track every notification, amendment, and procedural requirement.

Professional guidance can help merchant exporters understand applicable schemes, verify product classifications, review export documentation, identify potential compliance gaps, and evaluate eligible government benefits.

Exim Advisory supports businesses in navigating India's export-import regulatory framework through professional consultancy and compliance assistance.

Working with experienced consultants can help exporters make informed decisions, minimise documentation errors, and maintain better control over their international trade operations.

Conclusion

The changing export environment requires merchant exporters to move beyond traditional incentive-based planning and adopt a more comprehensive approach to international trade management.

The discontinuation of MEIS, the introduction and subsequent revisions of RoDTEP, increasing digital compliance requirements, changing logistics conditions, and greater emphasis on accurate documentation have reshaped how exporters manage their operations.

Businesses must stay informed about the latest government notifications and assess the Merchant Export Incentive scheme terminology in the context of currently available export benefits. Understanding the Merchandise Export Incentive scheme, the present RoDTEP framework, and other relevant Export Schemes and Incentives can help merchant exporters make better financial and operational decisions.

With appropriate compliance planning and professional support from Exim Advisory, Indian exporters can strengthen their export operations, manage regulatory responsibilities, and build sustainable competitiveness in international markets.

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