Govt may withdraw MEIS incentive

As part of the new export-import policy, the Commerce & Industry Ministry is considering a move to terminate Merchandise Exports from India Scheme (MEIS). The new export-import policy is going to replace the earlier one which expires in 2020 and put an end to the 4% incentive given to the garments exporters under MEIS.

MEIS has been very helpful for Indian exporters to tackle competition from Bangladesh and Vietnam since it provides duty credit to address infrastructure issues. The policy has been censured by the US at the WTO. This has propelled the government to restructure the policy.

The textile industry is apprehensive that curbing this scheme would be disastrous. Rahul Mehta, president, Clothing Manufacturers Association of India (CMAI) stated, “The move will kill the industry and lead to a major disaster because the industry operates at a very low margin. Withdrawal of the incentive will turn the margin negative.”