Ceiling on Merchandise Exports from India Scheme (MEIS)
Recently, the Ministry of Commerce and Industry, vide notification no. 30/2015-2020- DGFT dated 1st September 2020, announced ceiling on Merchandise Exports from India Scheme (shortly known as MEIS). Interestingly, as per the Government officials, 98% of the exporters, claiming MEIS benefits, will remain unaffected by the new ceiling limit prescribed under MEIS.
The present article briefly explains the recent announcements undertaken by the Government in MEIS and its effect thereon.
Background of MEIS
The Foreign Trade Policy 2015-2020 introduced the following two schemes-
- Merchandise Exports from India Scheme (i.e. MEIS); and
- Service Export from India Scheme (i.e. SEIS).
The main objective of MEIS is to encourage the manufacture and export of notified/ certified products/ goods. MEIS aims to offset the infrastructural inefficiencies and associated costs of exporting products/ goods produced in India. The exporters receive ‘duty credit scrips’ in the form of incentives under MEIS.
Vide notification no. 30/2015-2020- DGFT dated 1st September 2020, two paragraphs, namely, 3.04A and 3.04B, are inserted in the Foreign Trade Policy 2015-2020. The effect of the insertion of the new paragraphs is explained hereunder-
- The gist of paragraph 3.04A-
- The total reward allowable to an Importer-exporter code holder (i.e. IEC holder) cannot exceed INR 2 Crores.
- The ceiling limit of INR 2 Crores per exporter is applicable to the exports made during the period 1st September 2020 to 31st December 2020.
- The period of 1st September 2020 to 31st December 2020 shall be calculated based on the Let Export Order date of the shipping bills.
- Following exporters will not be eligible to submit any claim under the MEIS scheme-
- IEC holder who has not done any export during the period 1st September 2019 to 31st August 2020, or
- Exporter who has obtained IEC on or after 1st September 2020.
- The ceiling limit of INR 2 Crores per exporter can be further revised downwards to strictly limit the total prescribed allocation under MEIS to INR 5,000 Crore for the period 1st September 2020 to 31st December 2020.
- The gist of paragraph 3.04B-