What is happening to MEIS for Exporters- confusions explained

The Government of India, since 01.04.2015, has been providing an incentive of 2-20% of the export value to the exporters through the scheme of MEIS. MEIS in the form of Duty Credit Scrips was being provided through DGFT office. The scrip can be used to pay basic customs duties and are freely transferable, thus offering a cash value to the exporters. The rates of the scrips were increased by 2% for several products and services to give a fillip to exports at various times.

US had filed a case at WTO against India saying that these export incentives are inconsistent with provisions of WTO’s Agreement on Subsidies and Countervailing Measures. WTO has decided against India in this matter, and so the Government is obliged to discontinue the scheme soon.

Towards the end of July 2019, confusion started whether the MEIS has been stopped from 1 Aug 2019 as these were the dates displayed in the online filing portal of DGFT, and MEIS rates of all exports after 1.8.2019 were displayed as Nil. Further exports of several textile items that were eligible for ROSL were denied MEIS. The exporters were in a dilemma as incentive has a bearing on their export pricing and marketing. DGFT later announced in 2nd week of sept 2019 through twitter that MEIS will be available till 31^st December 2019. So it appeared that MEIS would be available till end of 2019 only.

Vide PN 47 dt. 7th Dec 2019, DGFT announced that the increased rates of MEIS would be only 31.12.2019 except for textile items of chapter 61,62 and 63, for which there would be no MEIS. This was interpreted by some newspapers and associations that MEIS will discontinue after 31.12.2019 and the confusions were galore.

The actual position is as follows, though not confirmed by a notification:

MEIS should continue at least for exports till 31.3.2020 as per the existing policy. After this it should be replaced by more WTO compliant RoDTEP scheme which is in the process of being worked out.
After 31.12.2019 MEIS would be available at the original rate before the rate increase.

We advise the exporters to keep marking YES in incentive column of shipping bills to avoid any inadvertent losses due to an ambiguous situation.

Please contact the Andees team in case you would wish to discuss your matters of merchandise exports and benefits against them, or any other matter related to Export-Import Policy, Procedures, Licenses, Incentives, FEMA, Customs etc.