 "Govt showers duty benefits to arrest slump in exports")
The government on Friday extended duty incentives under the Merchandise Exports from India Scheme (MEIS) to 110 products, including sports goods and medical equipment. The move, which will further hit the exchequer by Rs 3,000 crore, is aimed at arresting a fall in merchandise exports, which declined for the 10th consecutive month in September. The Centre, however, didn't announce interest subvention, as sought by exporters.
Through the MEIS, introduced by the Ministry of Trade and Commerce on April 1 this year, a certain percentage of the value of exports can be used to offset various duties, including customs, service tax and excise duty. Though the government retained this at two-five per cent, it increased the rate for some items such as industrial machinery, machine tools, textiles and paper.
It has also extended the countrywide coverage to items such as iron, steel, base metals and leather products, while global coverage has been accorded to commodities such as textiles, pharmaceuticals, auto components, computers and electrical products. As many as 2,228 products would get either higher MEIS rates or these incentives for export to more countries.
Federation of Indian Exports Organisation (FIEO) President S C Ralhan said the new items added to the MEIS list contributed about $10 billion to exports a year, or about three per cent to the overall value of exports. Now, the exports for which MEIS is applicable would account for about 55 per cent of the overall exports in a year, he added.
A few value-added items, especially in the agriculture sector, should also be considered, he said.
FIEO Director General and CEO Ajay Sahai said the move would cost the exchequer Rs 3,000 crore as allocations under MEIS has been raised to Rs 21,000 crore from Rs 18,000 crore. However, it would also add to the forex reserves of the country as exports increase, he added.
Introduced as part of the Foreign Trade Policy 2015-20, MEIS provides product and market-focused incentives for 4,914 tariff lines. Now, the scheme would be available to 5,010 products.
Termed MEIS duty credit scrip, the reward can be transferred or used to pay a number of duties, including customs duty and service tax.
In September, merchandise exports contracted 24.3 per cent to $21.84 billion, the steepest fall in 75 months.
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