Export sops likely to continue till March 2021

New Delhi: India is likely to continue export incentives worth Rs 40,000 crore till next year as the government looks to cushion the impact of Covid-19 on the country’s outward shipments.

The commerce and industry ministry is considering a plan to extend the Merchandise Exports from India Scheme (MEIS) till March 31, 2021. The proposal was mentioned in a letter to development commissioners of special economic zones from the Department of Commerce. ET has reviewed the letter.

India’s exports shrank almost 35% to $21.41 billion in March from a year earlier. They declined 4.8% to $314.31 billion in FY20 from $330.08 billion in FY19.


“MEIS extension will bring predictability to exports pricing and on the policy front. Exporters’ confidence will get a boost,” said Ajay Sahai, director general of the Federation of Indian Export Organisations. The scheme was extended to December 31, 2020, the government said last month when it announced the extension of the extant foreign trade policy by a full financial year till March 31, 2021.

Under MEIS, the government provides duty benefits, depending on the product and the destination country. Rewards under the scheme are payable as a percentage of the realised free-on-board value (of 2%, 3% and 5%) and the MEIS duty credit scrips can be transferred or used to pay duties including basic customs duty.

Exporters are estimated to have received benefits worth Rs 35,000-40,000 crore under MEIS in FY19. “Exporters would need financial support from the government to stand on their feet again… The government has to decide whether extending or increasing the MEIS rates is an option they would like to exercise,” said Pratik Jain, national leader, indirect tax, PwC. He said one specific recommendation of the industry was restora-tion of the 2% additional benefit of MEIS, which was withdrawn from January 1, 2020.

However, the reward rates under the scheme won’t be revised nor would they be expanded to cover more products such as gems and jewellery, a government official said.

This is because the scheme is transitioning to the Remission of Duties and Taxes on Exported Products. The government has also rejected a demand to provide an additional 5% benefit to all exports, saying it is “not feasible at this stage.”

The government has also vetoed a suggestion that MEIS be granted based on shipping bills, stating that the benefit is provided only after payment is realised and also said free trade and warehousing zone exports are not eligible for MEIS.

The scheme is being disputed at the World Trade Organization, with the US claiming India’s export subsidy programmes had hurt American workers.