Duty Drawback: All Industry Rate, Brand Rate and Re-Export

Duty Drawback explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Drawback is the oldest of the export schemes and still the only one that pays cash directly into the exporter's bank account. It is also the narrowest in one respect that matters constantly: it does not cover IGST or compensation cess.

The Duty Drawback Scheme "facilitates the rebate of duty on goods manufactured within India and subsequently exported. It is important to note that the DBK does not encompass Integrated Goods and Service Tax (IGST) or compensation." It is administered by the Department of Revenue, not the DGFT, and comprises three categories: All Industry Rate, Brand Rate, and drawback on re-export of imported goods.

The exclusion that defines its scope

Drawback covers customs and central excise duties borne on materials. It does not cover IGST or compensation cess — those are recovered through the GST refund route, either as refund of unutilised ITC under an LUT or as refund of IGST paid on export.

So the schemes are complementary, not alternatives. An exporter typically takes drawback on the customs duty content, GST refund on the IGST, and RoDTEP on embedded taxes not covered by either. What each cannot reach is the reason the next exists. RoDTEP →

And the administrative home matters. Drawback sits with the Department of Revenue; RoDTEP and the FTP schemes with DGFT and CBIC. Drawback disputes are customs disputes.

All Industry Rate

What it is. "The AIR of Duty Drawback for an export product is an average rate based on the average quantity and value of material and average duties of Customs and Central Excise borne by each class of material from which export goods are ordinarily manufactured."

Reviewed annually "on the Drawback Committee's recommendation."

Why exporters prefer it — the Handbook lists four reasons, and they are all about friction rather than quantum:

• "a straightforward mechanism for granting Duty Drawback based on the shipping bill declaration, eliminating the need for additional documentation";
• "end-to-end electronic processing";
• "Direct disbursal of Duty Drawback to exporters' accounts liberates working capital";
• "no requirement to generate separate documentary evidence for the realization of export proceeds."

That fourth point is unusual across the whole scheme landscape. RoSCTL claws back with 15% interest on non-realisation; refund of unutilised ITC is recovered under rule 96B; the AIR of drawback asks for no separate realisation evidence at the claim stage.

It is described as "widely favored by exporters, particularly medium and small exporters" — which follows directly from the documentation-light design.

Brand Rate

When it is available. "a specialized facility… enabling them to receive a rebate for the actual duty incidence incurred by an export product. This mechanism allows exporters to apply a specific Duty Drawback rate if the export product lacks an applicable All Industry Rate or if the available AIR does not neutralize more than 80% of the duties levied on materials utilized in production."

The 80% test is the gateway. An AIR neutralising 85% of actual duty incidence gives no access to Brand Rate, however much the exporter would gain. Below 80%, the door opens.

Who fixes it. "Brand Rates are fixed by the local Commissioners of Customs having jurisdiction over the place of export of goods on which Brand Rate of Duty Drawback is claimed."

And the process is designed not to block cash flow:

• "Pending the fixation of Brand Rate, the All Industry Rates, where available, can be availed upfront by the exporter."
• "A provisional Brand Rate can be allowed by the Commissioner of Customs on the exporter's request."
• "Brand Rate of Duty Drawback is disbursed electronically directly to the exporter's account in a manner similar to the disbursal of AIR."

So the sequence for a Brand Rate applicant is: claim AIR now, apply for Brand Rate, receive the differential. Nothing is held up while the rate is being determined.

Drawback on re-export of imported goods

"Duty Drawback can also be claimed on the export of duty-paid imported goods. Under this facility, goods imported earlier may be exported and Duty Drawback of up to 98% of import duty paid can be claimed on such exports."

Two requirements: "Proof of duty paid on importation" and "identification of the export goods as those that were imported earlier."

The 2% retained is the administrative charge, and it is why this route is described as "up to 98%" rather than a full refund.

Identification is the practical hurdle. Goods that have been repacked, relabelled, commingled with other stock or partly consumed become difficult to identify as the imported consignment — so this facility works cleanly for goods that were rejected, unsold, or returned in the same condition.

How drawback sits with the other schemes

It counts towards an EPCG obligation. "Exports under Advance Authorization, DFIA, Duty Drawback, RoSCTL, and RoDTEP Schemes are also eligible for fulfillment of the EO under the EPCG Scheme." EPCG →

It interacts with the Advance Authorisation value addition formula. In VA = (A − B) × 100 / B, the denominator B includes "value of any other input used on which benefit of DBK is claimed or intended to be claimed" — so drawback taken on non-authorised inputs reduces measured value addition. Value addition under AA →

And the apparel Special Advance Authorisation is built around it. Duty-free fabric comes under the authorisation, while "for non-fabric inputs the exporters shall be eligible for all industry rate of duty drawback", with the value of such inputs "equal to 22% of the FOB value of export realized."

Deemed exports have their own version — Deemed Export Drawback is one of the three benefits available under FTP Chapter 7. Deemed exports →

Finally, drawback bars one refund route. Under the GST refund rules there is "no refund of unutilized input tax credit where the goods exported out of India are subjected to export duty or the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid."

Read that limitation precisely. It is drawback of central tax that bars the ITC refund — not drawback of customs duties, which is the ordinary case.

Key takeaways

• Drawback rebates customs and central excise duties; it does not cover IGST or compensation cess.
• Administered by the Department of Revenue, unlike the DGFT schemes.
• Three categories: All Industry Rate, Brand Rate, and re-export of imported goods.
• AIR is average-based, reviewed annually, granted on the shipping bill declaration with no additional documentation and no separate realisation evidence, paid directly into the exporter's account.
• Brand Rate is available only where no AIR exists or the AIR neutralises 80% or less of actual duty incidence; fixed by the local Commissioner of Customs.
• AIR may be claimed upfront pending Brand Rate fixation, and a provisional Brand Rate may be allowed on request.
• Re-export drawback is up to 98% of import duty, needing proof of duty paid and identification of the goods.
• Drawback exports count towards an EPCG obligation, but drawback on inputs increases B in the AA value-addition formula.

Read next

• RoDTEP: E-Scrips and the Annual RoDTEP Return
• RoSCTL for Apparel and Made-Ups
• Advance Authorisation: Inputs, SION and Minimum Value Addition

Disclaimer: Positions stated as on 5 September 2026, based on the Customs Act, 1962 and the drawback rules made thereunder, and Chapter 5 of the Foreign Trade Policy 2023, as reproduced in the ICAI Handbook on Foreign Trade Policy – Incentives, Schemes & Related FAQs (November 2025, 2nd Edition).