The Indian government’s decision to cap incentives under the Merchandise Exports from India Scheme (MEIS) at Rs 2 crore per exporter for four months till December 31 is likely to likely affect 700-750 exporters of textiles, engineering items, automobiles, chemicals, pharmaceuticals, oil and gas.
The cap was introduced as the government found MEIS had failed to deliver the desired result of boosting exports, which were worth around $300 billion in the last five years despite its liberal application across sectors.
The government said 98 per cent of the exporters who claim MEIS would be unaffected by the changes as per an analysis of claims in the same period of 2018-19.
The top 50 exporters from these sectors account for around 20 per cent of the benefits under the scheme, the outgo under which was 45,000 crore in fiscal 2020.
The new Import Export Code obtained on or after September 1 would be ineligible to submit any MEIS claim for exports, and the ceiling would be subject to a downward revision to ensure that the total claim didn’t exceed the allocated Rs 5,000 crore for the period.