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MEIS benefit cap at Rs 2 cr to seriously affect exports

The government’s decision to cap export incentives under Merchandise Exports from India Scheme (MEIS) scheme at Rs 2 crore per exporter on outbound shipments made during September-December, 2020 is going to “seriously” affect traders, said Federation of Indian Export Organisations (FIEO).

FIEO president, Sharad Kumar Saraf on Wednesday said that the exports which will be made during September-December, 2020 are based on the orders, which have already been negotiated much earlier factoring the existing MEIS benefit.

These benefits are part of the export competitiveness and therefore the sudden change will affect the exporters’ financially as buyers are not going to revise their prices upward, he said.

”However, the sudden imposition of a cap of Rs 2 crore per IEC, on MEIS benefit of exports made during 01.09.2020 to 31.12..2020, is going to seriously affect exporters, whose numbers may not be very large, but their contribution to exports warrant a revisit to the imposition of cap,” he added.

FIEO expressed its concern over the financial outlay of Rs 5,000 crore given for exports during September-December, 2020 with the condition that if claims exceed Rs 5,000 crore, the ceiling may further be revised downwards.

”This will create huge uncertainty as those eligible for cap of Rs 2 crore will not be able to factor even such benefits in their exports. A clarity is also required whether any change in the MEIS rate will be notified for those who are not affected by the cap, if the amount of Rs 5,000 crore is exhausted,” it added.

FIEO also urged the government to extend the MEIS Scheme till March 31st, 2021, coterminous with the existing Foreign Trade Policy.

The Remission of Duties or Taxes on Export Product (RoDTEP) committee has started the work but Industry is facing challenges in providing the data due to frequent local lockdowns, non-availability of transport and non-functioning of auditors.

”Moreover, fixation of rate for over 10,000 items at 8 digits would be a time-consuming exercise, particularly as it has to meet the discipline of WTO,” observed Saraf.

The extension in the MEIS Scheme till March 31st, 2021 will help in a smooth rolling of the RoDTEP Scheme as well since the Scheme is going to stay for zero rating of exports, he said.

The government on Tuesday capped export incentives under the scheme at Rs 2 crore per exporter on outbound shipments made during the period from September 1 to December 31, 2020. Knn India

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