MEIS: When Change Is the Only Constant

The Merchandise Export from India Scheme (MEIS), which was introduced in FTP 2015-2020, has undergone several changes. Recently again, while 2,901 tarifflines were added to the MEIS schedule, reward rates across 575 tarifflines were altered. While just the word ‘added’ may sound good to some exporters, for the most, frequent changes and ambiguities in notifications are confusing many.

- Andres M. Molier

The Merchandise Export from India Scheme (MEIS) was the most radical change introduced in the new FTP 2015-2020. Focus Product Scheme (FPS), Focus Market Scheme (FMS), Market Linked Focus Product Scheme (MLFPS), Agri-Infrastructure Incentive Scrip (AIIS), Incremental Exports Incentivisation Scheme (IEIS) and Vishesh Krishi Gramin Udyog Yojana (VKGUY) – all the five schemes that were meant to boost merchandise exports in the earlier policy were replaced by one scheme i.e. MEIS.

NEED FOR CHANGE

Although MEIS appeared rosy on paper (it replaced erstwhile Chapter 3 incentive schemes, promised to address complex procedures and boost India’s merchandise exports), it hasn’t been the panacea for exports that the government expected it to be. To make it more attractive, it has undergone alterations since its launch. And one of the most significant announcements that has been talked about in the trading community is the amendment announced on September 22, 2016, through which DGFT added 2,901 tariif lines to the MEIS Schedule. Well, the same ammendment also increased rates of incentive (from 2% to 3%) across 575 tariff lines that were already eligible for rewards under MEIS. So far, so good.

Interestingly, the incentive rates in this amendment were not categorised as per country groups. However, in an earlier amendment, in May 2016, while incentives were uniformly awarded (in all 5000-plus tariff lines) across category A, B & C countries, the DGFT had maintained the market categories in its notification. Should exporters now therefore assume that country groupings are being done away with?

There is no way to come to a concrete conclusion based on what can be understood keeping the two amendments side by side, and this has lead to much confusion amongst several members of India’s exports community.