The finance ministry has raised its outlay for a key export scheme by 73% to Rs 15,555 crore for the April-December interval from its preliminary allocation of Rs 9,000 crore, offering some reduction to exporters as they wrestle to deal with the damaging affect of the Covid-19 pandemic.
However, the revised outlay for the Merchandise Exports from India Scheme (MEIS) for the primary three quarters of FY21 will nonetheless be approach beneath final 12 months’s degree. The finance ministry has accepted Rs 39,097 crore for the MEIS for your complete final fiscal.
Earlier this 12 months, each the finance ministry and the NITI Aayog identified that the MEIS had been shedding its efficacy and the associated fee to the exchequer far outweighed the advantages by way of greater exports, a declare disputed by exporters. The large reduce in MEIS allocation got here within the aftermath of the pandemic, which strained the federal government’s funds and compelled it to reprioritise expenditure. After December, the MEIS is meant to get replaced by one other scheme that may reimburse exporters taxes on inputs consumed in exports.
In an workplace memorandum despatched to director-general of overseas commerce Amit Yadav on Thursday, Gopal Krishna Jha, director (downside) within the income division, stated an MEIS allocation of Rs 10,555 crore has been accepted for exports between April and August and one other Rs 5,000 crore for the September-December interval.
“Further, retaining in thoughts the continuing stress on Customs revenues, it’s urged to restrict the issuance of MEIS obligation credit score scrips on this monetary 12 months.
Accordingly, DGFT is requested to challenge MEIS scrips as much as a complete worth of Rs 16,000 crore in FY21,” Jha wrote.
Merchandise exports witnessed a file 60% crash, year-on-year, in April, though the tempo of contraction has since narrowed as lockdown restrictions have been lifted. The exports grew 6% on 12 months in September, the primary rise since February, earlier than contracting once more by 5.4% in October, as dangers from exterior headwinds nonetheless remained very robust.
Notably, the federal government had in August determined to cap advantages beneath the MEIS at simply Rs 2 crore per exporter in the course of the September-December interval. Exporters have been additionally upset that even this restrict might be revised down, as the federal government had restricted general outgo beneath the MEIS to simply Rs 5,000 crore throughout these 4 months.
According to a commerce ministry estimate, about 98% of the exporters who declare MEIS will stay unaffected by the adjustments and fewer than 2% are prone to be impacted as per evaluation of claims within the related interval of 2018-19. However, some exporters have highlighted that these 2% exporters account for a considerable chnuk of the exports lined beneath the MEIS.
Earlier this fiscal, starved of sources following the pandemic, the income division “suddenly” capped the outlay for the MEIS at simply Rs 9,000 crore for the April-December interval, which meant that exporters is perhaps disadvantaged of over two-thirds of the advantages they often get beneath this scheme. This compelled the commerce ministry to dam the net module for claiming the MEIS advantages since July 23. However, the net module has been reactivated since September 1.