New Delhi, March 24, 2026 — India’s trade policy is in sharp focus this week as the government restored full benefits under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme for all eligible exporters effective March 23, while fresh data confirmed that India’s merchandise trade deficit with China has crossed the $100 billion milestone for the first time in a single fiscal year — underscoring the twin pressures of export support and import dependence shaping India’s trade agenda.
Key Developments
The Commerce Ministry announced on March 23, 2026, the restoration of RoDTEP rates and value caps at levels applicable as of February 22, 2026, effective from February 23 to March 31. The scheme — which remits embedded central, state and local taxes on exported goods not rebated under other mechanisms — had been cut by approximately half earlier in the fiscal year due to budgetary constraints. Full RoDTEP benefits will continue from April 1, 2026, the Commerce Ministry confirmed to FIEO. Incentive rates under RoDTEP range from 0.3% to 3.9% across product categories, covering textiles, footwear, pharmaceuticals, chemicals, leather, and engineering goods. India’s combined merchandise and services exports for February 2026 stood at an estimated $76.13 billion, growing 11.05% year-on-year, while merchandise exports alone reached $36.61 billion — up marginally from $36.56 billion in January 2026.
India’s trade deficit with China crossed $100 billion for the first time, reaching approximately $102 billion during April–February FY2025-26. Electronic components, telecom equipment, machinery and active pharmaceutical ingredients (APIs) dominate India’s imports from China, vastly outpacing Indian exports of petroleum products, copper items and electronics to that market. The milestone has reignited calls for an accelerated import substitution strategy and expanded PLI scheme coverage in critical sectors.
Policy & Government Action
The RoDTEP restoration comes directly in response to West Asia trade route disruptions, which have elevated shipping costs and eroded exporter margins across multiple sectors. The DGFT and Commerce Ministry have been working to ensure India’s exporters retain competitive pricing in global markets despite elevated freight rates and macroeconomic volatility. Notably, the HSBC Flash India PMI for March 2026 simultaneously reported record-high international new export orders, suggesting underlying demand for Indian goods remains strong — a trend the RoDTEP restoration is designed to sustain and amplify into Q1 FY2026-27.
Companies & Market Activity
Export-linked stocks saw a positive reaction to the RoDTEP announcement. Sun Pharma, Gokaldas Exports and other listed exporters across textiles, specialty chemicals and leather attracted renewed institutional investor interest. The Federation of Indian Export Organisations (FIEO) welcomed the move, noting that the continuity of incentives into April would allow exporters to plan forward contracts and production schedules with greater confidence. On the broader market, Nifty futures surged over 650 points overnight on improving US–Iran diplomatic signals, adding to the positive sentiment for trade and export-oriented businesses.
What to Watch
- Finalisation of full RoDTEP rates and value caps for FY2026-27, expected from the Commerce Ministry and DGFT by March 31.
- February 2026 final merchandise trade deficit figures from the Ministry of Commerce, expected in the coming week, which will confirm whether the current account trajectory has worsened materially.
- Policy response to the record ₹8.5 lakh crore (~$102 billion) India–China trade deficit, including potential new PLI scheme expansions, import tariff reviews, and bilateral trade framework discussions.
— Industrial Front Desk
Leave a comment