The central government has capped export incentives under the Merchandise Exports from India Scheme (MEIS) at Rs 2 crore per exporter on outbound shipments made during the period from September 1 to December 31 this year.
Under MEIS, the government provides duty benefits according to the product and country. Benefits under the scheme are payable as a percentage of the realized free-on-board value (of 2%, 3%, and 5%) and MEIS duty credit scrip can be transferred or used for payment of a number of duties including the basic customs duty. Also, it has been notified that the MEIS scheme is withdrawn with effect from January 1, 2021, the directorate general of foreign trade (DGFT) said in a notification.
The commerce and industry ministry had proposed a new round of incentives under the important scheme after the finance ministry stated the MEIS denied to deliver the desired result of increasing exports. India’s merchandise exports have hang around $300 billion in the last five years, despite the scheme’s liberal application across sectors. The liability under MEIS became around Rs 45,000 crore in FY20.98% of the exporters who declare MEIS might be unaffected by changes and less than 2% exporters are likely to be affected as according to the analysis of claims in the relevant period of 2018-19.
The move is aimed to shield actual exporters and permit them to claim benefits for exports within the period besides decreasing the possibility by taking new IEC to bypass the cap at the same time as enhancing notice of four months of the end date of MEIS presents certainty for destiny pricing selections.
Unaffected exporters who’ve already factored in MEIS in the pricing in their product do not face any alternate or uncertainty since neither coverage of products nor rates of MEIS may be modified, advance notice of 4 months of the end date of MEIS provides certainty for the future pricing decisions.
In 2014-15, the exports had been $310 billion and in 2019-20, it turned into $313 billion. Under MEIS, the government gives duty advantages relying on the product and country. Rewards under the scheme are payable as a percentage of realized free-on-board value and MEIS duty credit scrip may be transferred or used for payment of some of the duties, including the basic customs duty.
