The commerce and industry ministry is trying to find a solution on the issue of export incentive scheme MEIS without having a “serious” impact on government finances, Union Minister Piyush Goyal said on Thursday.
The commerce ministry has blocked the online system for exporters to apply for availing tax incentives under the MEIS (merchandise export from India scheme) from July 23, as the Department of Revenue decided to limit the benefits under the plan at Rs 9,000 crore for April-December 2020.
“I do not have a knee jerk solution on the MEIS. But, we are in dialogue with the requisite authorities. It’s not as if the MEIS is going away anywhere, its more a cash flow issue and we are all aware that Covid has had a very significant impact on govt revenues also.
“But I assure you, we are on top of it. We are in dialogue and we are trying for an early solution which can be a win-win on both sides. So, without a serious impact on government finances, we will try to find a solution which can help our exporters also,” the commerce and industry minister said at a webinar organised by CII.
The Department of Revenue has also asked its commerce counterpart to review the coverage of export incentive scheme MEIS, so that the fiscal benefits under this programme can be brought down to Rs 9,000 crore this fiscal as it has not yielded “desired” results.
It has also requested the commerce department that MEIS incentives should be targeted and need calibration in a manner that it promotes exports instead of spreading incentives in a manner that does not yield the desired result.
Under MEIS, the government provides duty benefits depending on product and country.
Rewards under the scheme are payable as percentage of realised free-on-board value and MEIS duty credit scrip can be transferred or used for payment of a number of duties, including the basic customs duty.
The MEIS scheme, introduced in April 2015, will be wound up by December 31, 2020, and the government has already announced the Remission of Duty or Taxes on Export Products (RoDTEP) scheme to replace MEIS.
According to an office memorandum of the Directorate General of Foreign Trade (DGFT), the Department of Revenue in May had conveyed that it may not be feasible to exceed MEIS allocation beyond Rs 9,000 crore for 2020-21 (up to December 2020).