This development needs to be understood from a cost, pricing, and policy perspective.

What Is RoDTEP?

Remission of Duties and Taxes on Exported Products (RoDTEP) is an export incentive scheme introduced by the Government of India to refund hidden taxes and levies that exporters incur during production but cannot claim through other mechanisms.

These include:

• Embedded state taxes
• Electricity duties
• VAT on fuel used in transportation
• Mandi tax and other local levies

The purpose of RoDTEP is to ensure that Indian exports remain tax-neutral and globally competitive.

What Does a 50% Reduction Mean?

If RoDTEP rates are reduced by 50%, exporters will now receive only half of the earlier remission benefit.

For example:

• Earlier benefit: 2% of FOB value
• After reduction: 1% of FOB value

This means exporters must absorb a higher portion of embedded taxes within their cost structure.

Direct Financial Impact on Exporters

A 50% cut in RoDTEP benefit affects exporters in several ways:

1. Reduced Margin Buffer

Exporters who priced products assuming the earlier RoDTEP rate will now see thinner margins.

2. Higher Effective Cost

Since embedded taxes remain unchanged, but refunds are lower, production cost effectively increases.

3. Pricing Pressure in Global Markets

In highly competitive markets, exporters may not be able to increase prices, forcing them to absorb the loss.

4. Impact on MSME Exporters

Small and medium exporters are more vulnerable because their pricing flexibility and margin cushions are limited.

Impact on Export Competitiveness

RoDTEP was designed to enhance price competitiveness in international markets. A 50% reduction weakens that advantage.

Potential consequences include:

• Reduced competitiveness in price-sensitive sectors
• Difficulty in securing new export orders
• Lower profitability in long-term contracts
• Pressure to optimize cost structures

For sectors operating on thin margins such as textiles, engineering goods, chemicals, and processed foods, even a small reduction in incentive can significantly affect viability.

Strategic Implications for Exporters

Export-oriented businesses may now need to:

• Recalculate export pricing models
• Review contract structures with overseas buyers
• Improve operational efficiency
• Optimize supply chain costs
• Explore higher-value product positioning

Exporters who depend heavily on incentive-based pricing strategies may need to rethink their approach.

Policy Perspective

Governments often adjust incentive rates due to:

• Budgetary constraints
• WTO compliance considerations
• Sector-specific prioritization
• Export performance review

However, any reduction in export incentives must be balanced carefully to avoid weakening global competitiveness.

Conclusion

The 50% reduction in RoDTEP benefit represents a significant shift in the export incentive landscape. While it may be a policy-level fiscal decision, its commercial impact is real for exporters.

Lower remission means higher effective cost, tighter margins, and increased competitive pressure in global markets. Exporters will need to respond strategically through efficiency improvements, pricing adjustments, and cost optimization to maintain their position in international trade.

This development is significant from a trade, legal, and cost perspective, especially for countries exporting to the United States.

US Supreme Court Decision on Trump Tariffs

In a landmark ruling, the US Supreme Court invalidated the broad tariffs that had been imposed using emergency economic powers. The Court ruled that the law used to justify those tariffs did not legally authorize the president to impose such wide-ranging import duties, emphasizing that tariff authority primarily rests with Congress.

These tariffs had earlier applied to imports from multiple countries and had significantly influenced global trade costs and supply chains. The ruling effectively removed a large portion of those emergency-based tariffs that had been affecting international exporters and US importers.

From a commercial standpoint, the removal of these tariffs was expected to:

• Reduce tariff burden on imports into the US
• Improve cost predictability for importers
• Ease trade pressure on global suppliers
• Stabilize international sourcing strategies

Immediate Policy Shift: Announcement of New 10% Tariff

Following the Supreme Court’s decision, a new policy move was announced almost immediately. A fresh 10% global tariff on imports was introduced under a different legal provision to maintain tariff revenue and trade control measures.

This new tariff is positioned as an additional duty that applies across imports and is layered over existing tariffs that remain legally valid under other trade laws.

In simple terms:

• Earlier broad tariffs (under emergency powers) were struck down
• New 10% tariff announced using an alternative legal route
• Existing sector-specific tariffs still remain in force

Impact on Global Trade and Import Costs

The removal of the earlier tariffs initially suggested a reduction in the duty burden on imports into the United States. However, the announcement of a new 10% tariff changes the overall cost dynamics rather than eliminating tariff pressure entirely.

Key cost implications include:

• Partial relief from invalidated tariffs
• Introduction of a new baseline 10% import tariff
• Continued duty exposure for US importers
• Ongoing cost adjustments in international trade pricing

This means the tariff structure has shifted, not completely disappeared.

What This Means for Exporters to the United States

For exporters, including those from India and other trading nations, the situation is more complex than a simple tariff removal.

The practical commercial impact is:

• Some earlier tariffs are no longer legally enforceable
• A new 10% tariff now applies on imports
• Export pricing must be recalculated based on revised duty structure
• US buyers may reassess sourcing costs and contracts

Even after the court ruling, imports are not tariff-free because new duties have been introduced through a different mechanism.

Legal and Policy Interpretation in Trade Terms

The Supreme Court ruling did not eliminate all US tariffs. Instead, it specifically targeted the legal basis under which the earlier broad tariffs were imposed. Tariffs applied under other statutes, such as national security and trade investigation laws, continue to remain in effect.

This highlights an important trade reality:
Tariff removal under one legal framework does not automatically mean complete tariff elimination in practice.

Market Uncertainty and Strategic Trade Outlook

The combination of tariff removal and immediate introduction of a new 10% tariff has created a transitional phase in global trade policy. Businesses, exporters, and importers must now operate in a revised tariff environment rather than a fully liberalized one.

Strategically, companies may need to:

• Re-evaluate export pricing to the US
• Monitor policy updates and legal developments
• Adjust supply chain cost planning
• Re-negotiate long-term trade contracts

Conclusion

The US Supreme Court’s decision to strike down the earlier Trump-era tariffs marks a major legal and trade policy shift. However, the immediate announcement of a new 10% tariff means that import duties have not been fully removed but restructured under a different legal framework.

From a pure trade perspective, the situation represents a transition in tariff policy rather than complete tariff relief. While some previously imposed tariffs have been invalidated, the newly announced 10% tariff ensures that imports into the United States will continue to face duty costs, maintaining a controlled tariff environment for global trade.

As global trade patterns shift and supply chains diversify, the India–EU FTA is expected to create new opportunities for businesses while strengthening economic cooperation between the two regions.

India–EU Trade Relationship: The Bigger Picture

The European Union is one of India’s largest trading partners, accounting for a substantial share of India’s exports and imports. Trade between India and the EU spans key sectors such as engineering goods, pharmaceuticals, textiles, chemicals, machinery, and services.

Despite strong trade ties, existing tariff and non-tariff barriers have limited the full potential of this relationship. The proposed FTA aims to address these challenges and provide a more predictable and transparent trade framework.

What Is the India–EU Free Trade Agreement?

The India–EU Free Trade Agreement is a comprehensive trade pact designed to:

• Reduce or eliminate customs duties
• Improve market access for goods and services
• Promote bilateral investment
• Strengthen regulatory cooperation
• Support sustainable and inclusive trade

The agreement also covers areas such as intellectual property, digital trade, labour standards, and environmental commitments.

Key Areas Covered Under the Agreement

1. Trade in Goods

The FTA is expected to significantly lower tariffs on a wide range of products. Indian exporters could benefit from improved access to the EU market for:

• Textiles and apparel
• Pharmaceuticals and medical devices
• Engineering and auto components
• Chemicals and processed foods

For EU exporters, the agreement may open greater access to the Indian market for:

• Machinery and industrial equipment
• Automobiles and auto parts
• High-value agricultural and food products
• Renewable energy technologies

2. Trade in Services

Services are a key focus area, especially for India. The FTA is expected to create opportunities in:

• IT and software services
• Professional and business services
• Financial services
• Education and research collaboration

Greater mobility of professionals and mutual recognition of qualifications are also under discussion.

3. Investment and Market Access

The agreement aims to encourage two-way investments by offering:

• Stronger investor protection
• Transparent dispute resolution mechanisms
• Improved regulatory certainty

This could enhance long-term investment flows and joint ventures across sectors.

4. Sustainability and Compliance

The EU places strong emphasis on sustainability, labour rights, and environmental standards. The FTA is expected to integrate:

• Climate-related commitments
• Responsible supply chain practices
• Compliance with environmental and social norms

For Indian exporters, this will require greater focus on ESG compliance and documentation.

Opportunities for Indian Businesses

The India–EU FTA can provide Indian exporters with:

• Reduced tariff costs, improving price competitiveness
• Access to one of the world’s largest consumer markets
• Opportunities to integrate into EU supply chains
• Greater certainty in long-term trade planning

MSMEs stand to benefit through simplified procedures and improved access to high-value markets.

Challenges and Considerations

While the FTA offers significant advantages, businesses must also prepare for:

• Stricter regulatory and quality standards
• Enhanced documentation and compliance requirements
• Competition from EU imports in sensitive sectors

A balanced approach is essential to ensure domestic industries remain competitive while benefiting from market access.

Strategic Importance of the India–EU FTA

Beyond trade volumes, the agreement holds strategic importance. It strengthens India’s engagement with Europe at a time when global trade alliances are being redefined. For the EU, India represents a fast-growing market and a reliable partner in diversifying supply chains.

Conclusion

The India–EU Free Trade Agreement has the potential to transform bilateral trade, deepen economic cooperation, and create long-term opportunities for businesses on both sides. As negotiations progress, exporters and importers should stay informed, review their supply chains, and prepare for new compliance requirements.

For Indian businesses willing to adapt, the India–EU FTA could become a gateway to sustainable growth in the global marketplace.

Once the export obligation is completed and the EODC (Export Obligation Discharge Certificate) is issued by DGFT, the final and crucial step is bond closure with Customs. This article explains the bond closure process after EODC, its importance, and key compliance requirements.

Understanding the Role of EODC and Bond Closure

When an Advance Authorisation or EPCG licence is issued, the importer executes a bond or LUT with Customs, backed by bank guarantee in some cases. This bond safeguards revenue by ensuring compliance with licence conditions.

The compliance lifecycle follows this order:

1. Import under licence
2. Fulfilment of export obligation
3. Issuance of EODC by DGFT
4. Bond closure with Customs

While EODC confirms completion of export obligation, bond closure formally releases the exporter from customs liability.

Why Bond Closure After EODC Is Important

Bond closure is not automatic after EODC. Exporters must separately approach Customs to complete this step. Without bond closure:

• The bond continues to appear as open in customs records
• Bank guarantees may remain blocked
• Future imports or licences may face compliance scrutiny
• Exporters may receive customs notices despite having EODC

Therefore, bond closure ensures final compliance and closure of the licence cycle.

Bond Closure Process for Advance Authorisation

Step 1: Obtain EODC from DGFT

Once export obligation is fulfilled, the exporter applies on the DGFT portal and obtains the EODC.

Step 2: Prepare Bond Closure Documents

Commonly required documents include:

• Copy of Advance Authorisation licence
• Original EODC issued by DGFT
• Import bills of entry
• Export shipping bills
• BRCs / eBRCs
• Copy of executed bond or LUT

Step 3: Submit Application to Jurisdictional Customs

The bond closure request is submitted to the customs authority where the bond was executed, along with all supporting documents.

Step 4: Customs Verification

Customs verifies:

• Imports against the licence
• Export fulfillment as per EODC
• Correlation between imports and exports

Step 5: Bond Discharge

Upon satisfactory verification, Customs discharges the bond and issues a bond closure confirmation, officially closing the licence at customs level.

Bond Closure Process for EPCG Licence

For EPCG licences, the process is similar but involves additional checks.

Key EPCG-Specific Aspects

• Capital goods installation and usage may be verified
• Export obligation is calculated based on duty saved value
• EODC must clearly mention full EO fulfillment

Process Flow

1. Obtain EPCG EODC from DGFT
2. Submit bond closure request to customs
3. Provide installation certificate, if applicable
4. Customs verifies capital goods and EO details
5. Bond and bank guarantee are formally released

Common Reasons for Delay in Bond Closure

• EODC not submitted to customs
• Mismatch between EODC and shipping bills
• Pending BRCs or unrealised export proceeds
• Bond executed at a different port than closure request
• Incomplete documentation

Early reconciliation helps avoid unnecessary delays.

Best Practices for Smooth Bond Closure

• Apply for bond closure immediately after EODC issuance
• Keep import-export data well reconciled
• Maintain copies of all customs and DGFT communications
• Track bond status with customs periodically
• Coordinate with banks for timely submission of BRCs/eBRCs

Conclusion

Bond closure is the final compliance step after receiving EODC under Advance Authorisation and EPCG schemes. While DGFT certifies export obligation fulfillment, Customs bond closure formally ends the licence liability.

Exporters who complete this process on time ensure clean compliance records, faster release of bank guarantees, and smoother access to future export incentives.

With global supply chains evolving and countries seeking reliable trade partners, the India–New Zealand Free Trade Agreement is expected to play a strategic role in shaping future trade dynamics.

Overview of India–New Zealand Trade Relations

India and New Zealand share a long-standing partnership based on democratic values, people-to-people connections, and growing economic engagement. While bilateral trade between the two nations has been steadily increasing, it remains underutilized compared to its full potential.

The FTA is designed to bridge this gap by reducing trade barriers and encouraging smoother movement of goods, services, and investments.

What Is the India–New Zealand Free Trade Agreement?

The India–New Zealand Free Trade Agreement is a comprehensive trade pact aimed at:

• Reducing or eliminating customs duties
• Facilitating trade in goods and services
• Promoting investment flows
• Enhancing regulatory cooperation
• Supporting small and medium enterprises (SMEs)

Once implemented, the agreement will provide preferential market access to businesses in both countries, making cross-border trade more cost-effective and predictable.

Key Areas Covered Under the Agreement

1. Trade in Goods

The FTA is expected to lower tariffs on a wide range of products. Indian exporters could gain improved access for sectors such as:

• Pharmaceuticals
• Textiles and apparel
• Engineering goods
• Automotive components
• Chemicals and processed foods

New Zealand exporters may benefit from enhanced access for:

• Dairy products
• Agricultural goods
• Meat and food products
• Wood and forestry products

2. Trade in Services

Services form a major component of India’s economy. The agreement is likely to improve market access for:

• IT and software services
• Professional and consulting services
• Education and training
• Healthcare services

This could create new opportunities for Indian service providers in the New Zealand market.

3. Investment Promotion

The FTA aims to create a stable and transparent environment for investments by:

• Protecting investor interests
• Encouraging joint ventures
• Promoting technology transfer

Improved investment confidence can lead to long-term economic growth for both nations.

4. Ease of Doing Business

By simplifying customs procedures and improving regulatory cooperation, the agreement seeks to reduce compliance burdens and transaction costs for traders.

Benefits of the India–New Zealand FTA

For Indian Businesses

• Greater access to the New Zealand market
• Reduced import duties, improving competitiveness
• Opportunities for service exports
• Stronger integration into global value chains

For New Zealand Businesses

• Entry into one of the world’s fastest-growing markets
• Expanded opportunities in agriculture, food processing, and education
• Stronger trade and investment ties with South Asia

Impact on MSMEs and Startups

The FTA is expected to particularly benefit MSMEs, which often face higher trade costs. Simplified procedures, lower tariffs, and better market access can help small businesses scale internationally and explore new export destinations.

Challenges and Considerations

While the agreement presents many opportunities, certain challenges must be addressed, such as:

• Sensitivity around agricultural and dairy sectors
• Balancing domestic industry protection with market openness
• Aligning regulatory standards

A carefully negotiated agreement is essential to ensure mutual benefit without adversely affecting local industries.

Conclusion

The India–New Zealand Free Trade Agreement represents a forward-looking approach to economic cooperation. By strengthening trade ties, improving market access, and fostering investment, the agreement has the potential to unlock new growth opportunities for businesses in both countries.

As negotiations progress, exporters and importers should stay informed and prepare to align their strategies with the opportunities that this FTA is expected to create. In an increasingly interconnected global economy, such partnerships are key to sustainable trade growth.

While these terms are often used interchangeably, they serve different purposes and follow a clear sequence. Understanding this flow helps exporters avoid delays, mismatches, and compliance issues.

What Is IRM (Inward Remittance Message)?

An IRM (Inward Remittance Message) is a confirmation generated by the Authorized Dealer (AD) bank when export proceeds are received in India from an overseas buyer.

It is the first official record of export payment realization and contains details such as:

• Exporter’s IEC
• Shipping bill reference
• Amount received
• Currency and conversion rate
• Date of remittance

Without IRM, the system does not recognize that payment has been received.

Why IRM Is Important for Exporters

IRM acts as the foundation for eBRC generation. Unless the bank uploads IRM details into its system and reports them to DGFT, the exporter will not be able to generate an eBRC.

IRM is essential for:

• Export incentive claims
• Closure of shipping bills in EDPMS
• DGFT compliance
• Audit and regulatory verification

In short, no IRM means no eBRC.

How IRM Flows into the eBRC System

Once the exporter receives payment:

1. The AD bank records the inward remittance
2. The bank generates the IRM
3. IRM data is electronically transmitted to DGFT
4. DGFT system links IRM with shipping bill data
5. eBRC becomes available for self-generation

Any mismatch in this chain leads to delays.

What Is an eBRC?

An eBRC (Electronic Bank Realisation Certificate) is a digitally generated certificate issued through the DGFT portal confirming that export proceeds have been realised against a specific shipping bill.

Unlike traditional BRCs, eBRCs are:

• Fully digital
• Linked to customs and bank systems
• Instantly accessible once data is matched

When Can You Generate an eBRC?

You can generate an eBRC only when:

• Export proceeds are received
• IRM has been generated by the bank
• Bank has uploaded IRM data correctly
• Shipping bill details match bank records

If any of these conditions are not met, the eBRC will not appear on the portal.

How to Self-Generate eBRC on the DGFT Portal

Step 1: Log in to DGFT Portal

Log in using your IEC-linked credentials.

Step 2: Navigate to eBRC Services

Go to:
Services → eBRC → View / Print eBRC

Step 3: Search Shipping Bill Details

Enter:

• Shipping bill number
• Shipping bill date
• Port of export
• Financial year

Submit the details.

Step 4: Verify IRM Details

The system will display:

• IRM reference number
• Realised amount
• Bank name
• Date of realisation

Verify the details carefully.

Step 5: Generate eBRC

If data is correct:

• Select the shipping bill
• Click Generate eBRC
• Download or print the eBRC for records

Common IRM & eBRC Issues Exporters Face

• Bank has not uploaded IRM
• Incorrect IEC mapping
• Partial realisation not updated
• Mismatch between shipping bill and remittance amount
• Old shipping bills not linked properly

In such cases, exporters must coordinate with their AD bank for correction or re-upload of IRM data.

Compliance Tips for Smooth eBRC Generation

• Track inward remittances regularly
• Follow up with banks for timely IRM upload
• Ensure shipping bill data is accurate
• Monitor DGFT portal periodically
• Maintain records for audits and incentive claims

Conclusion

IRM and eBRC are two connected but distinct steps in the export realization process. While IRM confirms receipt of payment, eBRC serves as official proof for compliance and benefits. Understanding this flow helps exporters avoid unnecessary delays, improve compliance, and ensure smooth access to export incentives.

A proactive approach—regular follow-ups with banks and periodic portal checks—can make the entire process seamless.

To address such genuine situations, the Reserve Bank of India (RBI) allows the write-off of shipping bills. Traditionally, this process required RBI approval. However, with liberalized guidelines, Authorized Dealer (AD) banks now have the power to write off export bills in many cases, making compliance smoother and faster for exporters.

This article explains how the write-off process works, when it is allowed, and what compliance requirements exporters must follow.

What Is a Write-Off of Shipping Bill?

A write-off simply means that the exporter is exempted from realizing export proceeds for a particular shipment, provided the case meets RBI-approved conditions. The shipping bill remains closed in the EDPMS system even without payment being received from the overseas buyer.

This process helps exporters stay compliant with FEMA regulations while avoiding penalties or prolonged follow-up for unrecoverable payments.

When Can AD Banks Write Off a Shipping Bill?

RBI allows AD Category-I banks to write off shipping bills under specific circumstances, such as:

1. Foreign Buyer Defaults

• Buyer becomes insolvent
• Buyer shuts down operations
• Buyer is unreachable despite repeated follow-ups

2. Short Shipment or Quality Issues (Not Attributable to Exporter)

Sometimes only part of the cargo is accepted, and the buyer refuses to pay for the full value.

3. Contract Cancellation

Situations where the buyer cancels the contract after shipment due to uncontrollable reasons.

4. Exporter Unable to Recover Payment After Genuine Efforts

Exporter must prove diligent follow-up through emails, reminders, or legal notices (if applicable).

5. Small Write-Offs Under Certain Thresholds

If the amount involved is minimal, AD banks can process the closure without escalation.

Eligibility Conditions for Write-Off by AD Bank

To approve the write-off request, the AD bank ensures that:

• The export proceeds have not been realized despite genuine follow-up.
• The exporter submits satisfactory documents supporting the non-realization.
• The case does not involve FEMA violations or restricted commodities.
• There is no evidence of collusion between exporter and importer.
• ECGC (if covered) has been appropriately involved — either claim filed or NOC obtained.

Once satisfied, the AD bank can close the shipping bill directly in EDPMS.

Documents Required for Shipping Bill Write-Off

A typical write-off request includes:

• Formal request letter from exporter
• Copies of shipping bill, export invoice, packing list
• Bank realization certificate (if partial payment received)
• Email communication or reminders sent to the buyer
• Buyer default proof (insolvency certificate, business closure proof, or undelivered emails)
• Chartered Accountant declaration
• ECGC NOC / claim documents (if insured)

Proper documentation is the key to smooth processing.

Compliance Steps for Write-Off Through AD Bank

1. Submit a Written Request

Exporters must submit a detailed request explaining why the export proceeds cannot be realized.

2. Provide Detailed Follow-Up Evidence

Banks review communication attempts for transparency and diligence.

3. Bank Verification

The AD bank verifies:

• Export documents
• Follow-up proof
• EDPMS entry status
• Any red flags linked to the importer

4. Write-Off Approval & EDPMS Closure

If satisfied, the bank marks the shipping bill as “Written Off” in the EDPMS system.

5. Record Retention

Exporters must retain all supporting documents for future audits or DGFT/Customs queries.

Why Write-Off Compliance Is Important

Maintaining clean export compliance records helps exporters:

• Avoid FEMA penalties
• Prevent EDPMS pendency
• Maintain good standing with banks
• Ensure eligibility for export incentives
• Stay compliant during DGFT or Customs audits

A cleared EDPMS report also enhances credibility for future trade finance and credit facilities.

Common Reasons Shipping Bill Write-Off Gets Delayed

• Incomplete documentation
• Lack of clear follow-up evidence
• Inconsistencies in invoice or shipping bill details
• Pending ECGC approvals
• Miscommunication between exporter and bank
• Old cases requiring additional justification

A well-prepared file significantly speeds up bank approval.

Conclusion

The ability of AD banks to write off shipping bills offers exporters a practical solution for handling unrecoverable export payments. It streamlines compliance, reduces RBI dependency, and helps maintain clean regulatory records. However, the process demands clear documentation, transparent communication, and strong justification.

With proper guidance and compliance management, exporters can close overdue shipping bills efficiently and avoid regulatory complications.

Earlier, the permissible limit for such closures was only USD 1,000 per consignment, which created administrative delays for both exporters and banks. This revision is expected to improve efficiency and reduce the compliance burden across the export ecosystem.

Understanding EDPMS and Its Role in Export Monitoring

The EDPMS (Export Data Processing and Monitoring System) is an online system introduced by the RBI to track export transactions and ensure that exporters realize their export proceeds within the stipulated timeframe.

Whenever an exporter ships goods overseas, the details are automatically captured in the EDPMS system through customs data. The corresponding bank is then responsible for monitoring whether the export payment has been received and for closing the entry once the proceeds are realized.

Earlier, for small-value shipments or cases where payments could not be realized due to minor discrepancies, banks had to seek RBI approval to close such entries — a process that often took weeks.

What Has Changed Under the New Guidelines

With the new directive, banks can now close EDPMS entries up to ₹10 lakh per consignment based on their internal assessment, without referring the case to the RBI.

This enhancement gives banks greater autonomy and flexibility in handling low-value or irregular transactions, significantly reducing administrative overhead.

It’s a notable jump from the earlier USD 1,000 limit, aligning the closure threshold with current trade realities and exchange rates.

Why This Change Matters

This regulatory update is part of RBI’s ongoing efforts to simplify trade compliance and support India’s export community. By delegating more decision-making power to banks, the central bank ensures that small exporters aren’t caught up in unnecessary procedural delays.

Here’s why this matters for exporters:

• Faster Resolution: Banks can now process and close pending EDPMS entries swiftly, improving turnaround time.
• Reduced Bureaucracy: No more multiple layers of approval for low-value export bills.
• Ease for Small Exporters: Many MSMEs and small traders exporting low-value consignments will benefit directly.
• Improved Record Accuracy: Faster closure helps maintain cleaner and more accurate export data.

When Banks Can Use This Power

Banks can use this extended limit to close EDPMS entries in genuine cases such as:

• Low-value or negligible balance amounts pending due to rounding off or transaction costs.
• Duplicate entries or system errors in EDPMS data.
• Cancelled shipments, short shipments, or re-imports.
• Promotional exports, free samples, or small trial consignments.
• Non-material shortfalls where recovery isn’t economically viable.

This gives banks the flexibility to apply practical judgment instead of being bound by rigid procedural requirements.

Impact on Exporters and Trade Ecosystem

For exporters, this change means:

• Simplified compliance process
• Reduced waiting time for closure confirmation
• Improved relationship with banks handling export documentation
• Cleaner trade records, leading to smoother future transactions

For banks, it means more autonomy, accountability, and operational efficiency, allowing them to focus on facilitating trade rather than navigating procedural approvals.

Conclusion

The RBI’s decision to raise the EDPMS closure limit from USD 1,000 to ₹10 lakh per consignment marks a major step toward improving the ease of doing business in India. It not only reduces administrative hurdles but also empowers banks to handle trade documentation with greater efficiency.

For exporters, particularly MSMEs, this update offers relief from unnecessary delays and helps maintain timely compliance — a welcome move that strengthens India’s export competitiveness on the global stage.

Understanding Duty Drawback

The duty drawback scheme allows exporters to claim a refund of customs duties paid on imported goods that are either re-exported or used in the manufacture of exported products.
This benefit is governed under two main categories:

1. Section 74 Drawback – Refund of duty paid on imported goods that are re-exported as such, without any major processing or manufacturing.
2. All Industry Rate (AIR) Drawback – Refund based on standard industry rates applicable when imported materials are used in the manufacturing of export goods.

While both serve the same purpose — refunding duties to exporters — the reasons for delays in each type differ significantly.

Why Section 74 Duty Drawback Gets Stuck

Under Section 74, the exporter claims a refund for goods that were imported and then re-exported. The refund can go up to 98% of the duty paid if re-exported within two years.

Common reasons for pending Section 74 duty drawback include:

• Incomplete Import–Export Linkage: Customs systems often fail to match re-exported goods with original import data, causing verification delays.
• Missing or Incorrect Supporting Documents: Original Bill of Entry, Export Invoice, and proof of identity of goods must exactly match.
• Late Submission: Claims filed beyond the permissible two-year period often face rejections or prolonged scrutiny.
• Improper Declaration at the Time of Export: If exporters forget to declare the intent to claim drawback under Section 74 at the time of shipping bill filing, it leads to ineligibility or additional verification.

A lack of synchronization between the import and export records is the biggest reason for Section 74 claims getting stuck.

Why All Industry Rate (AIR) Duty Drawback Gets Stuck

Under the All Industry Rate system, the refund is calculated as a fixed percentage of the Free on Board (FOB) value of exports, depending on the product category.

Delays in AIR drawback are usually due to:

• Mismatch in Shipping Bill Data: Even minor differences in HS code, product description, or invoice value between customs and bank data can freeze the claim.
• Non-realization of Export Proceeds: Customs holds the drawback until Bank Realization Certificates (BRCs) confirm that payment from the foreign buyer has been received.
• Incorrect or Missing Drawback Serial Numbers: Exporters sometimes fail to mention the correct drawback schedule number in the shipping bill.
• Changes in Drawback Rates or Notifications: When the Directorate of Drawback revises rates or withdraws certain items, older claims go under re-verification.
• EDI System Delays: Technical glitches in ICEGATE or customs systems also contribute to pending refunds.

In short, even a small technical or documentation error can stall your AIR drawback claim for months.

How to Resolve Pending Duty Drawback Claims

Whether your Section 74 or All Industry Rate refund is pending, the right professional approach can help you recover it faster.

Here’s how expert assistance can make a difference:

1. Comprehensive Claim Audit – Detailed review of import/export data, BRCs, and shipping documents to detect discrepancies.
2. Data Correction & Resubmission – Rectifying mismatches in invoices, HS codes, and drawback serial numbers.
3. Active Customs Coordination – Regular follow-up and clarification with customs officials for pending claims.
4. Guidance on Notifications & Circulars – Staying updated on changing customs regulations ensures your claim stays valid.
5. End-to-End Support – From documentation to final refund credit, professionals handle every step with accuracy.

Benefits of Clearing Your Pending Drawback Early

• Improved Cash Flow: Quick refunds release much-needed working capital.
• Error-Free Compliance: Ensures smooth future claims and audit readiness.
• Higher Export Competitiveness: Recover duties and reinvest in business growth.
• Time Savings: Eliminate repeated follow-ups with customs offices.

Timely drawback refunds help maintain healthy business liquidity and smoother trade operations.

Conclusion

A pending duty drawback — whether under Section 74 or All Industry Rate — doesn’t have to stay unresolved. Most delays are caused by documentation mismatches, missing declarations, or incomplete verification. With accurate records, prompt submission, and the right professional guidance, exporters can recover refunds efficiently and keep their operations running without interruption.

If your duty drawback claim is pending, now is the time to review, correct, and reclaim what’s rightfully yours.

A defining feature that strategically elevates TEPA above conventional Free Trade Agreements (FTAs) is the incorporation of a binding commitment on foreign investment and employment, marking a first for any Indian FTA. The EFTA States have formally pledged to mobilize USD 100 billion of Foreign Direct Investment (FDI) into India over a fifteen-year period, alongside the stated objective of supporting the creation of one million direct jobs. This commitment is monitored via an official investment facilitation mechanism. The mandatory, monitored investment pledge indicates a dedication to long-term economic partnership rather than simple trade volume expansion, signifying EFTA partners’ commitment to anchoring their value chains in India. This strategic positioning supports India’s national initiatives, such as ‘Make in India,’ by encouraging co-production in high-value sectors, including precision manufacturing and clean technologies. This stability is critical for trade strategists, as the longevity of preferential trade access is inherently tied to this FDI commitment, thereby enhancing the reliability of the trade policy environment. 

Tariff Liberalization: Scope, Structure, and Schedules 

The TEPA provides substantial bilateral market access, though the structure of tariff concessions for goods reflects a balanced approach that protects sensitive domestic Indian sectors. 

Market Access Scope and Nuances 

EFTA’s market access offer is extensive, covering 92.2% of its tariff lines, which encompasses 99.6% of India’s existing exports, including the immediate elimination of tariffs on 100% of non-agricultural products and concessions on processed agricultural products (PAP). India reciprocates by opening 82.7% of its tariff lines, covering 95.3% of EFTA exports. However, trade managers must note a crucial nuance: over 80% of EFTA’s existing exports to India consist of Gold, where prevailing duties remain unchanged. This means the liberalization effort is highly targeted toward manufactured and strategic goods. 

For Indian importers, understanding the calculation basis for tariff concessions is vital. The agreed-upon Base Rate, the starting point for all tariff reductions, is a cumulative calculation incorporating multiple duty components: the Basic Customs Duty (BCD), the Agriculture Infrastructure and Development Cess (AIDC), the Health Cess, and the Social Welfare Surcharge (SWS). 

Decoding India’s Multi-Band Tariff Concession Schedules 

India utilizes a granular, multi-band system of tariff elimination and reduction categories designed to strategically manage the opening of its market and protect domestic industrial development. This complexity requires sophisticated compliance tracking systems capable of navigating numerous phase-out periods. 

The concession categories defined in India’s schedule include: 

• Immediate Elimination (EIF): Duties are removed entirely upon the Entry Into Force date of October 1, 2025. 

• Progressive Elimination Categories: Tariffs are phased out gradually over specified periods, categorized as E5 (5 years), E7 (7 years), and E10 (10 years). 

• Deferred Elimination Categories: These categories provide a critical buffer period, aligning tariff reduction with strategic policy goals like the Production Linked Incentive (PLI) scheme. Examples include E0 (Eif+5), where duty elimination is immediate but only commences five years after the date of entry into force, or E5 (Eif+5), representing progressive elimination over five years starting five years after EIF. The deployment of these deferred categories ensures that nascent domestic industrial capacity can stabilize production without immediate, disruptive competition from highly efficient EFTA exporters. 

• Partial Reduction Categories: Duties are reduced to a fixed residual level rather than eliminated, such as R0 to 2.5% End Duty (immediate reduction to 2.5%) or R5 to 50% (progressive reduction to 50% of the original duty over five years). 

Sectoral Impacts and Protection 

Indian exporters gain improved access in key manufacturing and processing areas, including machinery, organic chemicals, textiles, leather, and processed foods. Pre-FTA tariffs on certain chemical products, which previously reached as high as 54%, will be eliminated, substantially increasing the competitive footprint of Indian chemical products in the EFTA bloc. 

Conversely, India has implemented robust safeguards for strategically important and sensitive sectors. These include dairy, soya, coal, medical devices, certain processed foods, and pharmaceutical products, where domestic capacity is being fostered under flagship initiatives. Concessions on these goods fall predominantly under the long, phased reduction schedules (E5, E7, or E10) or partial reduction categories. The reliance on this proliferation of tariff categories prevents the use of simple, static tariff application, mandating sophisticated customs software for accurate, real-time duty calculation. 

Rules of Origin (RoO) Mechanics 

The Rules of Origin (RoO), detailed in Annex 2.A of the TEPA, are the critical determinant for claiming preferential tariffs. This framework is characterized by flexibility, compliance efficiency, and targeted safeguards. 

General Principles and Product Qualification 

A product qualifies as originating if it is Wholly Obtained (WO) in one of the Parties, or if non-originating materials have undergone Sufficient Working or Processing (SWP). The SWP criterion is detailed through Product-Specific Rules (PSR) for each HS code, dictating the minimum required transformation. These rules can specify qualification based on Change in Tariff Classification (CTC) or Regional Value Content (RVC), with RVC being calculated using standard methods such as Net Cost or Transaction Value. Importantly, the agreement offers operational flexibility, allowing the PSR requirement to be met by combining operations carried out across different manufacturing facilities within the territory of a single Party. 

TEPA’s Advanced RoO Mechanisms 

TEPA aligns its RoO with global best practices, such as the Revised Kyoto Convention (RKC) and the WTO Trade Facilitation Agreement, offering features rarely found in India’s previous FTAs. 

The pivotal rule for complex supply chains is Diagonal Accumulation. This mechanism allows materials originating in any of the five Parties (India, Iceland, Liechtenstein, Norway, Switzerland) to be considered originating inputs when used in the manufacture of a product in another Party. This facility fundamentally incentivizes complex supply chain integration across the bloc, easing compliance burdens associated with calculating RVC and bolstering the strategic sourcing of high-tech or specialized inputs from EFTA nations. 

Furthermore, TEPA incorporates specific trade safeguards, notably the Melt and Pour Rule for iron and steel products. This specific requirement mandates that the fundamental process of melting and pouring the metal must occur entirely within the exporting Party. This non-RVC based rule serves as a powerful safeguard for India’s upstream heavy industry, ensuring that the full transformative process occurs within the free trade zone to prevent trans-shipment of materials originating outside the EFTA bloc. 

Administrative burdens are minimized through several facilitative rules, including permission for Accounting Segregation for fungible (interchangeable) materials, simplified inventory tracking for mass-produced goods, allowance for Non-Party Invoicing (Third Party Invoicing), and permissive direct transport rules. 

Proof of Origin: Certification and Verification Procedures 

TEPA adopts the modern concept of “Proof of Origin,” aligning with India’s recent revisions to the Customs (Administration of Rules of Origin under Trade Agreements) Rules (CAROTAR). This flexible approach provides four co-existing pathways for documentation, offering a significant reduction in administrative friction. 

Multiple Proof Pathways 

To claim preferential tariffs, businesses can use the following documentation: 

1. EFTA Origin Declaration: A self-declaration completed directly on commercial documents (e.g., invoices) by an Approved Exporter in an EFTA State (for EFTA exports to India). 

2. Movement Certificate (EUR.1): A traditional certificate issued by EFTA customs authorities or authorized bodies. 

3. India Agency-Issued Certificate of Origin: Issued by designated Indian authorized agencies, such as the Export Inspection Council or Chambers of Commerce. 

4. India Exporter Self-Declaration System: Allows approved Indian exporters to self-declare origin. 

For high-volume Exim operations, securing Approved Exporter status to utilize the self-declaration system provides a substantial operational premium. This mechanism allows immediate proof generation, eliminating administrative lag associated with agency-issued documents and leading to faster logistics and reduced working capital requirements. 

Procedural Requirements and Risk Mitigation 

Detailed procedures govern the documentation process. The EFTA-India Certificate of Origin must be issued at the latest within five working days from the date of export. A vital compliance safeguard permits. 

Retrospective Issuance in cases of error or involuntary omission, provided it occurs no later than one year from the date of export and is clearly marked “ISSUED RETROSPECTIVELY”. Furthermore, minor discrepancies between the proof of origin and other customs documents, such as typing errors, will not invalidate the origin claim. 

A critical procedural requirement for audit preparedness is the Record Retention mandate. Both the issuing authority and the exporter must retain copies of all origin documentation, including supporting manufacturing records, for a minimum period of five years. This lengthy retention period signals that post-clearance verification audits are anticipated. 

Strategic Compliance and Operational Recommendations 

Successfully leveraging the TEPA demands proactive operational and strategic adjustments across the supply chain. 

Adapting Trade Management Systems 

The diverse tariff schedules necessitate immediate system updates. Internal customs software must be configured to integrate the complex classifications (EIF, E5, E0 (Eif+5), etc.) and dynamically calculate the correct duty rate for every relevant HS code for each year following the October 1, 2025, entry into force. Compliance logic must also be validated to ensure the correct cumulative Base Rate components (BCD, AIDC, SWS, etc.) are used when calculating the preferential reduction amount. Failure to correctly manage the deferred elimination categories, where reductions start five years into the agreement, will result in non-compliance. 

Maximizing RoO Efficiency 

Trade organizations should immediately pursue Approved Exporter status in relevant jurisdictions to capitalize on the reduced friction offered by the self-declaration pathways. Furthermore, supply chain managers must conduct a thorough review of the Bill of Materials (BOM) for strategic products. The diagonal accumulation rule offers a powerful incentive to strategically source materials from any of the five signatory nations to boost Regional Value Content and easily meet complex PSRs. 

For manufacturers dealing with iron and steel, strict internal controls and vendor auditing must be instituted to ensure continuous compliance with the stringent Melt and Pour requirement. This requirement mandates deep traceability beyond typical RVC calculation and is non-negotiable for qualifying steel inputs. 

Verification and Audit Readiness 

Given the five-year record retention rule, trade compliance teams must establish a unified documentation protocol capable of handling all four Proof of Origin pathways. This protocol must ensure that meticulous, auditable records—including RVC calculation sheets, manufacturing records, and purchase orders—are digitized and archived for the full retention period. This readiness is crucial for defending against anticipated post-clearance verification audits. Furthermore, the commitment to specific time-bound verification Service Level Agreements (SLAs) within the TEPA allows for improved risk management, as timely responses by customs authorities are implicitly expected. 

The sophisticated compliance requirements under TEPA imply a dual compliance challenge. Teams must be trained on both import protocols (accepting EFTA Origin Declarations) and export protocols (justifying Indian origin) simultaneously, effectively treating India and the four EFTA states as an integrated trade bloc under Annex 2.A rules to achieve maximum utilization benefits. EFTA partners should note that their strategic investment in India directly contributes to fulfilling the binding $100 billion investment commitment, politically reinforcing the stability and duration of the trade concessions.