The recent notification by the Directorate General of Foreign Trade announcing a 50% reduction in Remission of Duties and Taxes on Exported Products (RoDTEP) rates has raised significant concerns within the Indian construction equipment (CE) industry.
ICEMA, an umbrella lobby body for construction equipment companies, in its latest quarterly update, highlighted concerns over the issue, stating: “This rationalisation, effective immediately, is expected to adversely impact export competitiveness across several engineering sectors, including CE.”
The Indian CE industry, currently valued at approximately $10 billion, is witnessing robust growth and is projected to reach $25 billion by 2030, with exports playing a pivotal role in this expansion. India currently exports CE products to over 130 countries, reflecting its growing global footprint.
Acknowledging the benefits of the RoDTEP scheme, ICEMA noted that it has been instrumental in ensuring global competitiveness by neutralising embedded taxes and levies. “However, the recent rate reduction is likely to increase export costs, compress margins, and create pricing uncertainties, particularly in highly competitive international markets,” ICEMA added.
Industry stakeholders have outlined key challenges, including the erosion of export margins, the risk of renegotiation of existing contracts, reduced competitiveness vis-à-vis countries offering stronger incentives, and increased working capital pressures, especially for MSMEs. The move may also slow export momentum amid uncertain global demand conditions.
With India’s share in global CE exports still below 2%, the industry sees significant untapped potential. In this context, stable and predictable export incentive frameworks remain critical to achieving the country’s ambition of becoming a global manufacturing and export hub.
“The industry has urged the government to reconsider the reduction and adopt a more calibrated approach, including phased implementation and a sector-specific review, to safeguard export competitiveness and sustain long-term growth,” the lobby body added.