Additional 2% export benefits to end Dec 31; Government yet to give roadmap for garments, madeups

NEW DELHI: Ahead of a new export incentive scheme to be rolled out from next year, the government on Monday notified that the additional benefits given under the existing Merchandise Export from India Scheme (MEIS) for all sectors except garments and made ups would end on December 31.

However, the government didn’t give any roadmap for the new scheme called Remission of Duties or Taxes on Export Products (RoDTEP). This is the first notification on the new scheme that finance minister Nirmala Sitharaman had announced in September.

The additional 2% benefits under MEIS were announced in August to help exporters who had claimed that delayed Goods and Services Tax (GST) refunds were hurting business. With the additional benefits gone, the original incentive of 2%, 3% and 5% would remain till the time RoDTEP comes in place.

RoDTEP scheme, which is scheduled to replace the MEIS from January 1 2020, is yet to get Cabinet approval.

“The MEIS benefits were stopped from August 1. This notification means that the benefits are on track till December 31,” said an official.

Exporters said this move will benefit labour intensive sectors including leather, handicrafts, marine, carpets and agriculture which were suffering due to lack of funds.

Under MEIS, export incentives ranging from 2-5% of export value are given to a large number of sectors depending on the product and the country being exported to. However, India may have put an end to the scheme as it violates World Trade Organisation rules. This is because India’s per capita Gross National Income has over-shot the threshold limit of $1000 per annum a number of years back and the time allowed under global trade rules to roll back export sops is coming to an end.

Sources said the department of revenue had asked the commerce department for a deadline for the additional benefits as they could not continue indefinitely.

“The lead time given to exporters is less. A minimum of three months should have been given,” said Ajay Sahai, director general, Federation of Indian Export Organisations (FIEO).

However, exporters said the government has not shared any roadmap for garments and madeups as they have been excluded from the scheme.

“The new scheme is expected early next year. This additional 2% clause has confusion for garment items,” said a Mumbai-based exporter of garments.