Govt. may extend MEIS scheme by three months

The government is hobnobbing with an idea to extend the Merchandise Exports From India Scheme (MEIS) by three months to March 31, 2021.

Any such extension will allow the government to complete an exhaustive exercise for rolling out the proposed Remission of Duties and Taxes on Exported Products (RoDTEP) scheme which is supposed to replace the MEIS and offer more time to exporters to prepare themselves for the transition.

Moreover, it makes sense to operationalise the new scheme along with the launch of the next foreign trade policy which will remain in effect for five years from April 1, 2021.

The government had earlier announced that it will roll out the RoDTEP scheme from January 2021 to make the outbound shipments zero-rated. The scheme is essentially aimed at reimbursing even embedded taxes (that are not subsumed by the GST) paid on inputs consumed in exports.

To that effect the government had set up a committee late July under former commerce secretary GK Pillai to suggest RoDTEP benefit rates. However, given that firming up the rates of benefits for thousands of products across various industries is a lengthy exercise, the government may need more time to finalise the incentive structure, it is understood. Allowing the MEIS to continue until the new scheme is fully operational is crucial to supporting the exporters as they struggling in the wake of the pandemic, exporters believe.

MEIS came under tighter government scrutiny in recent months especially in the wake of Covid and the resource-starved revenue department slashed its allocation under the scheme to just Rs 15,555 crore for the April-December period, which is just about 40 per cent of the outlay for the entire last fiscal. Some key wings of the government such as the revenue department and Niti Aayog have termed the MEIS an inefficient programme that only drains the exchequer.