Accordingly, DGFT is requested to concern MEIS scrips as much as a complete worth of Rs 16,000 crore in FY21,” Jha wrote.
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 aid to exporters as they battle to deal with the damaging impression of the Covid-19 pandemic.
Nevertheless, the revised outlay for the Merchandise Exports from India Scheme (MEIS) for the primary three quarters of FY21 will nonetheless be method beneath final yr’s stage. The finance ministry has accredited Rs 39,097 crore for the MEIS for your entire final fiscal.
Earlier this yr, each the finance ministry and the NITI Aayog identified that the MEIS had been dropping its efficacy and the associated fee to the exchequer far outweighed the advantages by way of greater exports, a declare disputed by exporters. The huge 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 (disadvantage) within the income division, mentioned an MEIS allocation of Rs 10,555 crore has been accredited for exports between April and August and one other Rs 5,000 crore for the September-December interval.
“Additional, holding in thoughts the continuing stress on Customs revenues, it’s steered to restrict the issuance of MEIS responsibility credit score scrips on this monetary yr.
Accordingly, DGFT is requested to concern MEIS scrips as much as a complete worth of Rs 16,000 crore in FY21,” Jha wrote.
Merchandise exports witnessed a document 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 yr 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 sturdy.
Notably, the federal government had in August determined to cap advantages underneath 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 may very well be revised down, as the federal government had restricted total outgo underneath the MEIS to simply Rs 5,000 crore throughout these 4 months.
In line with a commerce ministry estimate, about 98% of the exporters who declare MEIS will stay unaffected by the modifications and fewer than 2% are more likely to be impacted as per evaluation of claims within the related interval of 2018-19. Nevertheless, some exporters have highlighted that these 2% exporters account for a considerable chnuk of the exports coated underneath the MEIS.
Earlier this fiscal, starved of sources following the pandemic, the income division “immediately” capped the outlay for the MEIS at simply Rs 9,000 crore for the April-December interval, which meant that exporters is likely to be disadvantaged of over two-thirds of the advantages they normally get underneath this scheme. This compelled the commerce ministry to dam the net module for claiming the MEIS advantages since July 23. Nevertheless, the net module has been reactivated since September 1.
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November 13, 2020 at 08:18AM
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