MEIS Policy from 01.09.2020 – 31.12.2020

Lack of clarity on available funds lead to sudden stoppage of MEIS for exports after 01.04.2020
August 7, 2020
RoDTEP – Will this Road become a Trap for Exporters
November 23, 2020

Category : News

The government had decided regarding the partial resolution of the long-pending issue of incentives under the Merchandise Exports from India Scheme (MEIS) issue as far as exports for the duration from 1.9.2020 to 31.12.2020 are concerned. DGFT has announced the policy Vide Notification No. 30/2015-20 Dated 1st September 2020, the effect which is as follows:

    • MEIS benefit will be capped at Rs. 2 crore per exporter on exports made in the period from 01.09.2020 to 31.12.2020. This ceiling/cap may probably be subject to a further downward revision to make sure that the total allocation of MEIS benefit for the interval (September 1 to December 31, 2020) doesn’t exceed the prescribed allocation of Rs 5,000 crore.
    • There will be no change in the coverage of MEIS and the applicable rates.
    • New IECs obtained on or after the date of the notification of the above changes will be ineligible to submit any MEIS claim for exports made with effect from 01.09.2020.
    • IECs having no export turnover between 01.09.2019-31.08.2020 are also not eligible.

This policy is formulated keeping in view that the genuine exporters are protected and allowed to claim benefits for exports in the period and the possibility of fraud by taking new IEC to circumvent the cap is avoided. It is expected that 98% of the exporters who claim MEIS will be unaffected by the changes and only less than 2% exporters are likely to be affected as per analysis of claims in the preceding year 2018-19.

It is expected that this Rs.5000 crore are not included in budgetary allocation of Rs. 9500 for this year i.e. 01.04.2020-31.08.2020.

It is also mentioned that MEIS benefits shall not be available to exports made with effect from 01.01.2021, by which time RoDTEP scheme is expected to be kicked in.

The present notification is silent on the issue of MEIS for the exports made during the period 01.04.2020 to 31.08.2020. This issue is still under consideration and the modalities , rates will be announced soon.

RoDTEP scheme is still on the drawing board with most of the exporters, still not having submitted their data and details. The GK Pillai committee is asking the exporters data to fix the ceiling rates in the scheme. Exporters are having tough time to work on the price of their product for international markets from 1.1.2021 onwards, as the rates under RoDTEP may not be available till the last month of this year.

Incentives under the SEIS (Service Exports from India Scheme) for service exports made during 2019-20 and in this financial year are also yet to be decided. Since there is a shortfall for MEIS itself, service exporters are keeping their fingers crossed.

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