Essentially, duty drawback serves as a post-export reimbursement of duties on inputs used in export products. Many governments, especially those in highly protected economies, implement this scheme to refund customs duties, service taxes, and excise duties incurred during production. By doing so, they help exporters maintain price competitiveness in global markets.

Beyond promoting exports, duty drawback also plays a strategic role in shielding domestic markets from foreign goods by maintaining high import duties. This twofold approach—supporting domestic producers while discouraging excessive reliance on imports—reinforces economic self-sufficiency.

China serves as a prime example of how government incentives and subsidies can significantly boost the export sector. India, too, has long recognized the importance of duty drawback. To offset the impact of import duties and enhance global competitiveness, the Indian government introduced its own duty drawback scheme, ensuring that Indian exporters operate on a level playing field.