Withdrawal of MEIS on Made ups With Retrospective Effect - a Matter of Serious Concern - Chairman, TEXPROCIL

Government has removed the benefit of 4 per cent MEIS on exports of Made-ups and Garments with retrospective effect from March 7, 2019. Further, all the MEIS that has been granted to the exporters of Made-ups and Garments on exports till July 31, 2019, will be recovered.

"Withdrawal of 4 per cent MEIS with retrospective effect has caused an extremely serious situation for the exporters of Made-ups and has indeed come as a shock," said Dr KV Srinivasan, Chairman of The Cotton Textiles Export Promotion Council (TEXPROCIL). Exporters of Cotton Made-ups were already passing through tough situation financially due to the non-implementation of the Scheme to Rebate State & Central Taxes & Levies (RoSCTL). This scheme which was announced for exports of Made-ups and Garments with effect from March 7, 2019, is yet to be operationalized although more than nine months have passed since its announcement.

Further, MEIS of 4 per cent was also freezed for Made-ups and Garments from August 1, 2019. Moreover, there are still some pending claims under the erstwhile ROSL scheme which was discontinued effect from March 7, 2019. "Exporters of Made-ups are facing serious working capital problems affecting their day to day business activities," said Dr Srinivasan. Exporters have factored the availability of 4 per cent MEIS along with the RoSCTL scheme which is to the tune of 8.2 per cent while quoting export prices to foreign buyers for shipments to be effected over a period of 8 to 9 months.

With the removal of 4 per cent MEIS, exports at these prices will now become uneconomical and exporters will have to bear huge losses on such shipments, pointed out Dr Srinivasan. Many of the exporters have also paid advance tax on these export receivables as required under the Income Tax Act which has further aggravated the problem. The Chairman, TEXPROCIL has pointed out that the main issue is the withdrawal of 4 per cent MEIS with a retrospective effect that has caused distress and uncertainty among the exporters.

"Withdrawal of export benefits with retrospective effect put a huge question mark on the stability of the Policy which is much needed to attract investments and for the development of trade & industry besides creating confidence among the exporters," said Dr Srinivasan.

"Any changes or modification of existing policy and benefits should be with prospective effect," he added.

All the exporters small, medium and large have been badly affected by this decision especially the MSME sector where the bulk of the Made-ups meant for exports are being manufactured. According to Dr Srinivasan, exporters are working against tough competition from countries like Bangladesh, Sri Lanka, Vietnam and Pakistan combined by high import duties in leading export markets like the US, EU, China, etc on Indian products and in such a scenario the removal of 4 per cent MEIS has demotivated the exporters especially the merchant exporters. Srinivasan has urged the Government to restore the benefit of 4 per cent MEIS on exports of Made-ups and Garments from March 7, 2019, and to continue with the same till March 31, 2020.

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