Understanding India's MEIS Scheme

Published on: Tue Oct 31 2023
Understanding India's MEIS Scheme

Understanding India's MEIS Scheme

 

The Merchandise Exports from India Scheme (MEIS) is a crucial government initiative in India aimed at promoting exports and fostering economic growth. It was introduced as a part of the Foreign Trade Policy (FTP) and is managed by the Directorate General of Foreign Trade (DGFT). The MEIS scheme provides financial incentives to exporters, thereby encouraging them to explore new markets, diversify their products, and improve their overall competitiveness in the global market.

 

Background to MEIS

 

The MEIS scheme was launched to replace the previous incentive schemes such as the Focus Product Scheme and the Focus Market Scheme. It came into effect on April 1, 2015, and was implemented as a part of India's commitment to the World Trade Organization (WTO) to phase out export subsidies. The primary objective of the MEIS is to incentivize exports and offset infrastructural inefficiencies and associated costs.

 

MEIS Incentive

 

Under the MEIS scheme, exporters are eligible for incentives in the form of duty credit scrips. These scrips can be used to pay various customs duties, including basic customs duty, anti-dumping duty, and safeguard duty. The incentives provided under MEIS are calculated as a percentage of the Free on-board (FOB) value of the exported goods. The rate of incentive varies depending on the category of products and the destination of exports.

 

MEIS Incentive Application Procedure

 

Exporters must follow a structured application process to avail the benefits of the MEIS scheme. Here are the key steps involved:

  1. Registration with DGFT

 To participate in the MEIS scheme, the first step is to register with the Directorate General of Foreign Trade (DGFT) and obtain an Importer Exporter Code (IEC) if you don't already have one. The IEC is a mandatory requirement for all importers and exporters.

 

  1. Eligibility Check

Before applying for MEIS incentives, ensure that the products you are exporting fall within the categories eligible for incentives. The DGFT publishes a list of eligible products and their corresponding rates, and this list is periodically updated.

 

  1. Online Application

Exporters need to file their MEIS incentive applications through the DGFT's online portal. The application process typically involves the following steps:

a. Log in to the DGFT's online platform using your IEC credentials.

b. Navigate to the MEIS application section.

c. Fill out the application form with the required details, including the exporter's details, the product category, and the destination of exports.

 

  1. Supporting Documents

Along with the application, you will need to submit various supporting documents, which may include:

a. Shipping bills or bills of lading, which serve as proof of export.

b. Invoices related to the export transactions.

c. Certificates of origin or other relevant certificates.

d. Any additional documents that the DGFT may require to validate your application.

 

  1. Declaration of Information

As part of the application, you may be required to make a declaration regarding the accuracy and completeness of the information provided. Providing false or misleading information can lead to penalties or disqualification from the MEIS scheme.

 

  1. Submission within Timeframe

MEIS applications must be submitted within a specific timeframe, as specified by the DGFT. Exporters should adhere to the prescribed schedule to be eligible for incentives.

 

  1. Examination and Approval

After the submission of the application, the DGFT will review the application and supporting documents. If all requirements are met, and the application is found to be in order, the DGFT will approve the application.

 

  1. Issuance of Duty Credit Scrips

Upon approval, the DGFT will issue duty credit scrips to the eligible exporters. These scrips represent the incentive amount, and their value can be used to pay various customs duties.

 

  1. Utilization of Scrips

Exporters can use the duty credit scrips to offset customs duties during the import of goods or services. They can also transfer the scrips to other parties or sell them in the open market for liquidity.

 

Usage of MEIS Incentive

 

Duty credit scrips earned under the MEIS scheme can be utilized in several ways:

a. Payment of customs duties during the import of goods or services.

b. Transferring the scrips to another party or entity, allowing them to use it for customs duty payment.

c. Selling the scrips in the open market, providing exporters with additional liquidity.

 

Goods Notified Under MEIS

 

The Merchandise Exports from India Scheme (MEIS) covers a wide range of products from various sectors, and the specific goods that are eligible for incentives are determined by the Directorate General of Foreign Trade (DGFT). The list of eligible products is published by the DGFT and is subject to periodic updates based on changing trade priorities, global market dynamics, and government policies. Here are some of the types of goods that are typically notified under MEIS:

  1. Manufactured Goods
  2. Agricultural Products
  3. Chemicals and Pharmaceuticals
  4. Gems and Jewelry
  5. Handicrafts and Handloom Products
  6. Engineering Goods
  7. Textiles and Apparel
  8. Leather and Leather Products
  9. Chemical and Allied Products

 

Ineligibility of Benefits under MEIS

 

While the MEIS scheme offers numerous advantages to Indian exporters, there are certain restrictions and ineligible categories. Some goods, services, and exports are not eligible for MEIS benefits, including:

a. Export of imported goods.

b. Exports through specified routes like Vishakhapatnam, Chennai, and Tuticorin to specific destinations.

c. Export of products subject to export restrictions, including items covered under the negative list of exports.

 

Duration of MEIS

The MEIS scheme was originally introduced for a period of five years. The duration of the Merchandise Exports from India Scheme (MEIS) is subject to changes based on government policies and trade agreements. MEIS was introduced as a part of the Foreign Trade Policy (FTP) and has seen multiple extensions and modifications since its inception. The scheme's duration has been extended several times to support Indian exporters and promote trade.

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