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Govt. Capping MEIS benefits will seriously affect traders: FIEO

3rd September, 2020 Economy

Context: ‘Pricing based on existing scheme; new rules to raise costs’

More about news:

  • The government’s decision to cap export incentives under MEIS scheme at ₹_2 crores per exporter on out bound shipments made during September-December, 2020 is going to “seriously” affect traders, FIEO.

About MEIS scheme:

  • MEIS was introduced in the Foreign Trade Policy (FTP) for the period 2015-2020. The MEIS was launched as an incentive scheme for the export of goods. The rewards are given by way of duty credit scrips to exporters. The MEIS is notified by the DGFT (Directorate General of Foreign Trade) and implemented by the Ministry of Commerce and Industry.

Background to MEIS

  • MEIS replaced the various export incentive schemes, which gave different types of duty credit scrips namely, Focus Market Scheme (FMS), Focus Product Scheme (FPS), Vishesh Krishi Gramin Udyog Yojana (VKGUY), Market Linked Focus Product Scheme (MLFPS) and Agri Infrastructure incentive scheme. All duty credit scrips issued under the earlier incentive schemes were transferred to the MEIS.

MEIS incentive

  • Under the FTP 2015-20, MEIS intends to incentivise exports of goods manufactured in India or produced in India. The incentives are for goods widely exported from India, industries producing or manufacturing such goods with a view to making Indian exports competitive. The MEIS covers goods notified for the purpose of the scheme.

How to use MEIS incentive

  • The duty credit scrips can be utilised to pay customs duties on import of inputs or goods, safeguard duty, anti-dumping duty and any other customs duty under FTP 2015-20. The scrips can also be transferred as well as used for importing goods against them.
  • Exporters can request for a split of the duty credit scrip with a condition of each scrip valuing to at least Rs 5 lakh.
  • The scheme provides the flexibility of import and payment to exporters and has removed many structural inefficiencies of the earlier incentive schemes.

Goods notified under MEIS

MEIS incentivises close to 5,000 items classified and notified under various ITC (HS) codes and with corresponding reward rates ranging from 2% to 5%. The items are notified by the DGFT.

Ineligibility of benefits under MEIS

The sectors or segments mentioned below are not entitled to MEIS incentives:
– SEZ/EOU/EHTP/FTWZ products exported through DTA units.
– Supplies made to SEZ units from DTA units.
– Deemed Exports.
– Export of imported commodities covered under paragraph 2.46 of FTP.
– Export commodities, which are subject to a minimum export duty or export price.
– Exports via trans-shipment, meaning thereby exports that are emerging in the third country but trans-shipped through India.
– Exports initiated by units in Free Trade and Warehousing Zones (FTWZ).

Duration of MEIS

The MEIS incentives are applicable from 1 April 2015 until the validity of the FTP 2015-20, which is 31 March 2020.

Reference: https://cleartax.in/s/merchandise-exports-india-scheme-meis