MEIS scheme to be withdrawn in phases; new scheme to reimburse export levies gets nod

The popular Merchandise Export from India Scheme (MEIS) for exporters will continue beyond March 31, for some more months and then be withdrawn in phases and replaced with the new Remission of Duties or Taxes on Export Product (RoDTEP) scheme following discussions on the appropriate rates with exporters, Commerce & Industry Minister Piyush Goyal said. RoDTEP was approved by the Cabinet on Friday.

“Whatever taxes, or duties or local levies imposed by the Centre, State or local governments that are not getting refunded through any other scheme, will be done through RoDTEP in a way that is compliant with the World Trade Organization (WTO) norms,” Goyal told reporters at a press conference after the Cabinet meeting.

He said the Department of Revenue and the Directorate General of Foreign Trade will hold discussions over the next six-eight months with exporters for fixing the appropriate rates for the RoDTEP scheme for various products.

Uncertainty on extension

There was uncertainty amongst exporters on whether the MEIS scheme would continue beyond March 31, as the existing Foreign Trade Policy 2015-20 comes to an end this month. Many want the scheme, which offers export incentives ranging from 2 -5 per cent of export value on specific products, to continue for some more time because with exports falling this year and the coronavirus outbreak there was a need for stability in policy.

India is working on withdrawing the MEIS scheme as the WTO has declared that it violates global trade rules. However, since India has already complained against the ruling at the WTO Appellate Body, which is right now dysfunctional, the targeted schemes need not be replaced at once. Goyal said the RoDTEP scheme will adhere to all WTO laws.

“RoDTEP rates will have to be determined for each product based on the data that comes out. That will be an ongoing process. We will use the next six-eight months to progressively talk to all the industries. All industries should work out on the taxes that don’t get reimbursed under GST or drawback rates. Any taxes they have to face, if each industry works it out and comes to the drawback department, then the committee can quickly take it up. Then we can start phasing out MEIS and replacing it with RoDTEP,” Goyal said.

India’s exports declined almost 2 per cent in the April-January 2019-20 period to $265.26 billion. Last year, India’s exports were valued at $331 billion.