The Finance Ministry and the NITI Aayog considers the Merchandise Exports of India Scheme (MEIS), which is one of the industry-supporting initiative to boost exports, an inefficient and wasteful approach. The policy makers are considering putting financial resources into new production linked incentive (PLI) schemes in select sectors with core competency and potential for global exports.
The Department of Commerce has, therefore, issued an Office Memorandum (dated. 27 July 2020), which intimates that due to non-allocation of additional fund by Dept. of Revenue for MEIS for FY 2020-21 beyond the already marked Rs 9000 crore, the online MEIS module has been blocked on July 23 from accepting new application for shipping bills with LEO (Let Export Order) dated 1st April 2020 onwards to limit the issuance of any more scrips. The office memo says that MEIS scrips worth Rs 422.4 crore have already been issued to exporters with LEO since April. The MEIS cost the government Rs 43,500 crore in FY 2019-20.
Reacting to the order, Ronak Rughani, Chairman, SRTEPC said that the sudden blockage of the online module to apply for MEIS on 23rd July is a shock for the exporters and it is a discouraging message in these difficult times of Covid-19 pandemic. He informed that blockage and discontinuation of the incentives under the MEIS would severely hit exports from the country which have already been bleeding because of Covid-19 pandemic. He further stated that MEIS was designed by the Government under the Foreign Trade Policy 2015-20 to provide relief to exporters to offset infrastructural inefficiencies and associated costs. Since currently infrastructural inefficiencies and associated costs have multiplied due to lockdown, paralysed economic activities, created labour shortage, etc. in the aftermath of the Covid-19 pandemic, the incentives and support of the MEIS are extremely important. “Our exports are already facing fierce price competition globally against exports from China and if the MEIS is also stopped, then the Indian manufacturers and exporters will be completely thrown out of international markets. Hence, to cushion the exports, Government should not cap the MEIS benefits. It is urgent and crucial for the government to restore the MEIS benefits till the RoDTEP is activated,” Rughani added.
To note the MEIS was launched as an incentive scheme for the export of goods after merging various schemes for different sectors. Duty credit scrips issued under earlier incentive schemes were transferred to the MEIS and the rewards are given by way of duty credit scrips to exporters.