Capping MEIS benefits at Rs 2 cr to affect Bajaj Auto, TVS Motor the most

Any limit to export incentives under the Merchandise Exports from India Scheme (MEIS) may impact two-wheeler exporters Bajaj Auto and TVS Motor the most. 

Benefits will be restricted to Rs 2 crore per exporter from Sep 1 to Dec 31, and may be discontinued from Jan 1, 2021. Incentives for exports to less developed countries are higher, but on an average are 2 per cent of export revenues. 

Among firms with high exports, Nomura Research says TVS Motor will be hit the most as FY20 export incentives brought 14 per cent of operating profit and a quarter of profit before taxes. 

While Bajaj Auto’s exports at over Rs 12,000 cr is by far the largest among listed auto players, its impact on operating profit and pre-tax profit is lower at high single digits on a higher base and other income.