MEIS rate hike to benefit Indian agri exporters marginally

Solvent Extractors' Association wants incentives on oilmeals to be hiked further; seeks inclusion of groundnut meal and cottonseed linter in MEIS

To boost commodities’ exports from India, the government on Friday raised incentives on a majority of agricultural products by 3 per cent to make them competitive in global markets.

The Directorate General of Foreign Trade (DGFT) in a circular on Friday raised the Merchandise Export from Indian Scheme (MEIS) from 7 per cent to 10 per cent on a number of agri commodities, including dairy products and soybean meal. The same circular also brings in a number of other commodities under the MEIS net. 

The DGFT raised MEIS rates on fresh (unripened or uncured) cheese, including whey cheese and curd; red onion, garlic, fats, oils derived from milk and dairy spreads; oilcakes and other oil residues to name a few. 

“The government’s move to raise export incentives on soybean meal would make India’s export more competitive in the international markets,” said Davish Jain, chairman, the Soybean Processors’ Association. 

In last six months, the export of oilmeals improved compared to the previous year, thanks to a good monsoon, better oilseeds production and price parity. In percentage terms, export showing improvement, but is still lower compared to earlier years. During 2016-17, exports of oilmeals were reported at 1.89 million tonnes valued at about Rs 33 billion against 1.54 million tonnes worth about Rs 26 billion a year ago. Though oil meal exports seem to have revived, it is very far below the level India achieved three years ago.

“Currently, 5 per cent MEIS is available against certain oilmeals. We request the same be raised to 10 per cent and also extend the benefit to groundnut meal and cottonseed linter which was inadvertently left out. Further, we would also take this opportunity of requesting you to include 5 per cent incentive on exports of rice bran oil. Needless to say rice bran oil has good potential and this incentive would go a long way in increasing their production/exports in our country,” Atul Chaturvedi, President of the Solvent Extractors’ Association (SEA), said in a letter to Union Finance Minister Piyush Goyal. 

Meanwhile, the ongoing trade war between the US and China has created a lot of uncertainty and forcing China to look out to other origins for their requirements of soybean and oilmeals. This has compelled China to relook its ban on importing of oilmeals from India since 2012. This is expected to open up the Chinese market for India. This, however, is subject to clarification about phytosanitory certificate for export of oilmeals from India. 

SEA has also urged the government to resolve trade issues with China for export of rapeseed meal, which is competitive there. “The Chinese buyers are willing to purchase Indian rapeseed meal if the issue is resolved. Prior to the ban, India was exporting to China nearly 300,000-400,000 tonnes of rapeseed meal and 100,000 tonnes of soybean meal, earning forex of over Rs 7-8 billion per annum,” said B V Mehta, executive director, SEA. 

With negligible presence in the world market, India’s dairy exports would get a marginal benefit following the raise in the MEIS rate.