Merchandise
Exports from India Scheme (MEIS): A Comprehensive Guide
Introduction:
The Merchandise
Exports from India Scheme (MEIS) is a flagship export incentive scheme
introduced by the Government of India under the Foreign Trade Policy (FTP)
2015-2020. Designed to promote the export of notified goods produced in India,
MEIS aims to offset infrastructural inefficiencies and associated costs
involved in exporting products. This article provides an in-depth analysis of
the scheme, its objectives, benefits, eligibility criteria, application
process, and its impact on India's export landscape.
Objectives of MEIS
1.
Enhance Export
Competitiveness: By providing financial incentives to exporters, MEIS aims to
make Indian products more competitive in the global market.
2.
Diversify Export
Markets: The scheme encourages exporters to explore and expand into new
markets, thereby reducing dependency on a limited number of export
destinations.
3.
Boost Employment: By promoting exports,
MEIS indirectly supports job creation in various sectors, particularly in
manufacturing and related industries.
4.
Address Trade
Imbalances: The scheme helps in increasing export volumes, thereby
contributing to the reduction of trade deficits.
Key Features of MEIS
1. Incentive Structure:
·
Exporters are rewarded with Duty Credit Scrips based on the FOB
(Free On Board) value of their exports.
·
The incentive rates vary from 2% to 5%, depending on the product
and the destination country.
2. Product and Market Coverage:
·
The scheme covers a wide range of products, including
agricultural goods, textiles, leather products, handicrafts, and industrial
goods.
·
Initially, the scheme targeted markets in Africa, Latin America,
and the Commonwealth of Independent States (CIS), but it was later expanded to
cover more destinations.
3. Transferability of Scrips:
·
The Duty Credit Scrips awarded under MEIS are transferable.
Exporters can sell these scrips to other importers, providing them with
additional liquidity.
4. Utilization of Scrips:
·
Scrips can be used to pay various duties, including customs
duty, excise duty, and service tax.
Eligibility Criteria:
1. Eligible Exporters:
·
Any exporter registered with the Directorate General of Foreign
Trade (DGFT) and holding a valid Importer Exporter Code (IEC) can apply for
benefits under MEIS.
2. Eligible Products:
·
The scheme applies to a broad spectrum of products as specified
in the MEIS Schedule, which is periodically updated by the government.
3. Export Destinations:
·
MEIS incentives are available for exports to specified markets,
which are categorized into three groups based on their economic conditions and potential
for Indian exports.
Application Process:
1. Registration:
·
Exporters must register with the DGFT and obtain an IEC number.
2. Submission of Applications:
·
Applications for MEIS benefits are submitted electronically
through the DGFT portal.
·
Exporters must provide details of the shipment, such as shipping
bills, e-BRC (electronic Bank Realization Certificate), and other relevant
documents.
3. Issuance of Scrips:
·
Upon verification of the application, the DGFT issues Duty
Credit Scrips to the exporter.
4. Utilization/Transfer:
·
Exporters can use these scrips to pay applicable duties or
transfer them to other importers for monetary consideration.
Benefits of MEIS
1. Increased Profitability:
·
The financial incentives provided under MEIS enhance the
profitability of exporters by offsetting part of their export costs.
2. Market Diversification:
·
MEIS encourages exporters to explore and enter new markets,
thereby reducing reliance on traditional markets and spreading risk.
3. Liquidity Support:
·
The transferability of scrips provides exporters with additional
liquidity, which can be crucial for small and medium-sized enterprises (SMEs).
4. Support for MSMEs:
·
By providing incentives, the scheme helps micro, small, and
medium enterprises (MSMEs) to scale up their operations and compete
internationally.
Impact of MEIS
1. Export Growth:
·
Since its inception, MEIS has contributed to a significant
increase in India’s merchandise exports, helping the country achieve a more
favorable balance of trade.
2. Sectoral Development:
·
The scheme has led to growth in various sectors, particularly
those where India has a competitive advantage, such as textiles, leather, and
handicrafts.
3. Job Creation:
·
By boosting exports, MEIS has supported job creation across
different sectors, especially in labor-intensive industries.
4. Enhanced Global Presence:
·
The scheme has helped Indian products gain a stronger foothold
in international markets, enhancing the country’s global trade presence.
Challenges and Criticisms
1. Complexity in Administration:
·
The application and verification process can be cumbersome,
requiring exporters to navigate through bureaucratic procedures.
2. Limited Awareness:
·
Not all exporters, particularly those from the MSME sector, are
fully aware of the scheme and its benefits.
3. Overlapping with Other Schemes:
·
The introduction of the RoDTEP (Remission of Duties and Taxes on
Exported Products) scheme has led to some confusion among exporters regarding
the benefits and applicability of different schemes.
4. Trade Policy Compliance:
·
There have been concerns about the compatibility of MEIS with
World Trade Organization (WTO) rules, particularly regarding the subsidies it
provides.
Recent Developments
1. Transition to RoDTEP:
·
The government has announced the phased replacement of MEIS with
the RoDTEP scheme, which aims to provide more WTO-compliant export incentives.
2. Budget Allocations:
·
Budgetary allocations for MEIS have been adjusted to align with
the transition to RoDTEP, impacting the availability of funds for MEIS
incentives.
3. Policy Reviews:
·
The government continues to review and update the MEIS schedule,
ensuring that the scheme remains relevant and aligned with current trade
policies.
Conclusion: The Merchandise Exports from India Scheme has played a pivotal
role in boosting India’s export performance and enhancing the competitiveness
of Indian products in the global market. While the scheme has faced certain
challenges, its overall impact on the country’s trade landscape has been
positive. As India transitions to the RoDTEP scheme, it is crucial for
exporters to stay informed about policy changes and leverage available
incentives to maximize their export potential.
Disclaimer: All the Information is based on the notification, circular
and order issued by the Govt. authority and judgement delivered by the
court or the authority information is strictly for educational purposes and on the
basis of our best understanding of laws & not binding on anyone.
