Govt eases norms for exporters under MEIS

The Dollar Business Bureau

In its efforts to facilitate smooth business and revive exports, the government of India has eased the rules for exporters. The need to submit landing certificates by exporters to claim benefits under the MEIS (Merchandise Exports from India scheme) is lifted with effect from 4 May 2016.

The MEIS scheme was started in April 2015, under the Foreign Trade Policy (FTP) to incentivise exports of merchandise, where exporters get duty credits at particular rates of 2 %, 3 % and 5 %, based on the product of export and destination country.

According to the original FTP, the benefits under MEIS were provided only after the exporters submitted proof of landing at the country of export. However, this proof was not required where MEIS was already available for shipment to all export destinations—it was required only for 2787 lines.

The recent amendment on FTP Appendix 3B, shared by Directorate General of Foreign Trade (DGFT) MEIS Scheme covers 5012 lines, out of which 2787 lines required submission of proof of landing, as rewards wasn't available for all makers. However, going forward, certification of landing shall not be required under MEIS.

The government has taken several measures to tackle the problems of exporters under MEIS.

For instance, in October 2015, the government has increased the yearly resource allocation from Rs.18,000 crore to Rs.21,000 crore. In other word, the expected total revenue losses to the exchequer due to benefits under MEIS will rise to Rs.22,000 crore per year, as compared to Rs.21,000 crore last year. The government has also increased the rates for duty drawback by 2% for several sectors including marine, engineering and textiles.

As exports of engineering and petroleum products dropped significantly due to weak global demand, the shipments from India declined 16% in FY2016, reaching 5-year-low, at $261 billion.