Total potential revenue losses due to incentives under the MEIS will go up to Rs 22,000 crore a year from the earlier Rs 21,000 crore.
The government has broadened the ambit of its Merchandise Exports from India Scheme (MEIS) and scrapped a requirement for exporters to submit landing certificates of goods to avail of benefits under the MEIS, as it steps up efforts to improve the ease of doing business and reverse a slide in the country’s outbound shipments.
The cost to exchequer due to the increase in the market coverage of several products under the MEIS is expected to be around Rs 1,000 crore a year. So the total potential revenue losses due to incentives under the MEIS will go up to Rs 22,000 crore a year from the earlier Rs 21,000 crore, according to a commerce ministry estimate.
All 5,012 products covered under the MEIS will be eligible for global coverage from May 4, according to the directorate general of foreign trade. This means irrespective of the export destinations, the outbound shipments of all items contained in the MEIS list will be eligible for specific benefits under the scheme. Earlier, exports of as many as 2,787 products were eligible for MEIS benefits only if they were shipped to specified regions.
For shipments effected on or after May 4, exporters need not submit landing certificates to get the MEIS benefits. The move came after the approval of commerce and industry minister Nirmala Sitharaman, who also chairs the board of trade comprising 70-odd officials cutting across public and private sectors as well as central government departments.
Under the MEIS, the government usually provides exporters duty credit scrip at 2% and 3% of their export turnover, depending upon the product and the export destination, as envisaged in the foreign trade policy 2015-20. The scrip can be transferred or used for payment of a number of duties, including the basic customs duty.
“The decision augurs well for the country’s exports. It will reduce compliance costs of exporters, boost the ease of doing business and raise the competitiveness of our export items,” Ajay Sahai, the director general of the Federation of Indian Export Organisations, told FE.
The country’s exports contracted for a 16th straight month through March. Exports dropped 16% in the last fiscal to touch a five-year-low of $261 billion, as shipments of petroleum and engineering products declined sharply due to gloomy external environment.