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MEIS Scheme - Latest News and Updates

Abbreviated as MEIS, the Merchandise Exports From India Scheme was part of India’s efforts to encourage exports. Launched as an essential component in Foreign Trade Policy by the Ministry of Commerce under the guidance of the Government of India. The Directorate General of Foreign Trade (DGFT) introduced electronic governance of this scheme which was implemented for the period 2015-2020.

MEIS is an incentive scheme under which exporters of India receive unique duty credit scrips for their excellent work in exports and contributing their share in overcoming infrastructural bottlenecks in International trade.

MEIS Scheme Latest News

In 2018, the United States challenged five Indian export subsidy schemes in the WTO (World Trade Organisation), debating that Indian export subsidiary programs provided by the Government of India distorted trade by offering direct subsidies.

The five schemes that the United States challenged are as follows:

  • Export Promotion Capital Goods (EPCG)

  • Merchandise Export from India Scheme (MEIS)

  • Electronics Hardware Technology Parks (EHTP)

  • Special Economic Zone (SEZ)

  • Export Oriented Units (EOU)

In October 2019, the World Trade Organisation ruled these schemes to be inconsistent with W.T.O. agreements. As per MEIS Scheme’s latest news, announced in 2019, a new incentive scheme, Remission of Duties and Taxes on Exported Products (RoDTEP), replaced the MEIS Scheme w.e.f 1st January 2021. The Union Cabinet approved the withdrawal of the MEIS Scheme.

Under the RoDTEP, different Central and State taxes and duties as imposed on other products like expenses on power charges, V.A.T. on fuel in transportation, power generation, farming sector, stamp duty, and focal extract obligation on energy utilized in the vehicle, among others, would be discounted to exporters, as a % age of F.O.B. worth of products. This would be done as e-scrips that can be used for payment of Basic Customs Duty.

Objectives of MEIS and RoDTEP

While the objective of both; MEIS and RoDTEP is to support trades via giving prizes and motivations, the MEIS scheme framed under India’s Foreign Trade Policy for the period 2015-2020 offered certain incentives and rewards to exporters at specific rates depending upon product-to-product and country-to-country.

At the baseline, MEIS did not focus on a tax neutralization scheme. Instead, it focused more on providing rewards to the exporters to adjust the Infrastructural deficiencies and related expenses.

MEIS Scheme vs. RoDTEP Scheme: Difference

MEIS’s motivating force in the form of duty credit scrips was given as transferable scrips. But, RoDTEP accommodates a refund of indirect charges on inputs utilized in the export manufacturing on traded items that are not repaid under some other mechanism.

As per the decision of the WTO Disputes Settlement Panel, the plan of MEIS was not in agreement with WTO exchange standards. On the other hand, RoDTEP is entirely consistent with WTO exchange standards. Under WTO standards, certain charges are permitted to be repaid like: accounts forced by the state on power, oil, water, transportation, and some other nearby collects/cess and so forth.

Feature MEIS RoDTEP
WTO Compliant No Yes
Incentive 2-5% of realized FOB value of exports n free foreign exchange or FOB value of exports as per shipping bill, whichever is lower Product-based percentage way of reward
Incentive Scheme Incentive on exports of goods in the form of transferable scrips Refund of indirect taxes on inputs used in the manufacture of exported products that are not being currently reimbursed in any other existing schemes

Mode of Issue Transferable Scrips. Transferable duty credit/ electronic scrip in electronic ledger form

~Table Information Source- BYJU

Components of RoDTEP Scheme

Reduction of expenses/obligations/demands

  • It covers obligations and charges imposed at the focal, state, and neighborhood levels that are not repaid under some other instrument. Things that were under the MEIS and the RoSCTL are moved to the RoDTEP.

Mechanizeddigitalization discount framework

  • Discounts will be given to exporters as adaptable obligation credit/electronic scrips and kept up within an electronic record. This is following the Digital India mission.

  • Exporters can utilize this to pay essential traditional obligations on imported merchandise. Different shippers can likewise move the credits.

Quick leeway through digitalization

  • Quicker freedom through a computerized stage will be worked with through a checking and review component, with an IT-based danger the executive’s framework that would confirm the exporters’ records.

What are the vital advantages of RoDTEP?

As per MEIS Scheme’s latest newsunlike MEIS, RoDTEP, which fully complies with WTO rules and agreements, is fit for offering continuous financial benefits to all the exporters. The scheme shall additionally satisfy international standards of trading and assist businesses to grow substantially.

The scheme shall also permit repayment of tax and duties, thus allowing the exporters to perform more competitively in the global market.

In the current existing subsidy providing plans, certain state charges on oil, energy, water and instruction, education, and so forth are non-reimbursable. But all these charges are covered under RoDTEP.

The plan rejects specific areas like iron and steel, articles of iron and steel, synthetic compounds, and drugs which are doing great without motivators and yet incorporate not many new items. When the RoDTEP Scheme was reported, the rejected classifications were referenced in the guidelines, and these items were excluded from the avoided classes. Hence, it is a test for those exporters who have made commodities considering the notional RoDTEP rates.

It is advantageous to see that since the RoDTEP Scheme is a WTO Compliant and is likewise a lead plan of the Department of Commerce, accordingly, things have been saved adaptable as there is an arrangement to audit the RoDTEP rates on a yearly premise which will be advised well ahead of time before the start of a financial year.

Nonetheless, it should be noticed that one of the key drivers is the general spending plan/cost for the RoDTEP Scheme that would be finished by the Ministry of Finance in discussion with the Department of Commerce (DoC), considering every single important factor.

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