The Merchandise Exports from India Scheme (MEIS) was launched by the Government of India to boost the export of notified goods that are produced or manufactured in the country. The scheme has been introduced through the Foreign Trade Policy (FTP) and came into effect on 1 April 2015. The MEIS will be applicable till the year 2020 and will replace the below 5 incentive schemes that were earlier available under the Foreign Trade Policy 2014-2019:
- Market Linked Focus Product Scheme (MLFPS)
- Focus Product Scheme (FPS)
- Agriculture Infrastructure Incentive Scrip (AIIS)
- Focus Market Scheme (FMS)
- Vishesh Krishi Gramin Upaj Yojana (VKGUY)
The Ministry of Commerce and Industry is responsible for the implementation of the MEIS which is considered a major export promotion initiative by the Indian government. Under this scheme, over Rs.22,000 crore per year has been allocated by the Government of India for exports.
Objective of the MEIS:
According to the Indian Foreign Trade Policy 2015-20, the objective of the MEIS will be to counteract infrastructural inefficiencies and related costs involved in the export of products or goods manufactured or produced in India. The scheme will focus on goods/products with high employment potential and high export intensity which consequently, will enhance India’s competitiveness in exports.
Features of the MEIS:
- Previously, the FTP had 5 different schemes to reward merchandise exports but now with MEIS, it has been consolidated and simplified into a single scheme. The earlier schemes came with different kinds of duty scrips and had varying conditions attached to it. The MEIS eliminates this hassle by amalgamating all the conditions into one scheme.
- Under MEIS, a percentage of realised FOB (Free on Board) value (2,3, or 5%) of the exports are payable as incentives. The rewards are paid in the form of the MEIS duty credit scrip that can be used to pay for a number of taxes/duties including excise duty/customs duty/service tax. Imported inputs and scrips can be transferred fully offering flexibility to exporters.
- At the moment, a total of 5012 tariff lines are covered under the MEIS. Initially, the MEIS covered only 4914 tariff lines and an amount of Rs.18,000 per year was allocated. However, the market and product coverage was later expanded to Rs.22,000 crore per year and to 5012 tariff lines.
- The duty credit scrips issued under MEIS are freely transferable and can be used for payment of excise duty, service tax, and customs duty.
- The incentives that are available under MEIS are also available to units located in Special Economic Zones (SEZs).
Benefits to Exporters under the MEIS:
Exporters receive certain incentives and rewards under the MEIS and these incentives are given at a predetermined rate and vary from country to country and product to product. The countries for which incentives are permitted are categorised into 3 - Category A, Category B, and Category C.
Category A comprises Traditional Markets (30) - the USA, Canada, and European Union (28). Category B comprises Emerging and Focus Markets (139) - CIS countries (12), Africa (55), ASEAN countries (10), Latin America and Mexico (45), Turkey and Western Asian countries (13), South Korea, Japan, Taiwan, and China. Category C comprises other markets (70).
For most goods, the percentage of incentives range from 2% to 5% and will vary from product to product.
Commodities which are eligible for incentives under MEIS:
Under the MEIS, incentives awarded for commodities are classified into different product groups based on the below criteria:
- Highest rewards will be given for - packages and value-added products, agricultural and village industry products, labour intensive products, eco-friendly and green products, products with a large number of producers and exporters, industrial products from potential winning sectors, and hi-tech products.
- First time support will be given for - export of vegetables, fruits, oil meals, dairy products, paper, paper board products, AYUSH and Herbal products.
- Global support will be provided for - tea, flowers, fruits, coffee, essential oils, vegetables, cereals preparation, handloom, shellac, marine products, jute products and technical textiles, handmade carpets, wood articles, coir, other textiles and readymade garments supported in the markets of the USA, Canada, European Union, and Japan.
- Support to major markets will be provided for - surgicals, pharmaceuticals, industrial machinery, machine tools, herbals, auto components/parts, hand tools, automobiles, ships, bicycles, plastics, chemicals, ceramic and glass, steel furniture, rubber, leather garments, lighters, wood, iron, steel, and base metals, etc.
How to file an application under the MEIS:
- To claim rewards under the MEIS, the application has to be filed online in the format specified i.e., ANF-3A and has to be submitted using a digital signature.
- An application has to be filed on the website of DGFT (Directorate General of Foreign Trade) with the relevant Regional Authority for the export of goods.
- Separate applications will need to be filed for every port of export. One application can contain a maximum of 50 shipping bills.
- For exports carried out through the EDI port, there is no need of submitting shipping bill, a physical copy of the application, RCMC, and e-BRC but submitting the proof of landing is a mandate.
- The online application has to be accompanied with the relevant e-BRC and relevant EDI shipping bill.
- If exports are carried out through a non-EDI port, the following documents need to be submitted - proof of landing, physical copy of export promotion copy of non-EDI shipping bills, and scanned copies of other prescribed documents for claiming scrip.
- Applicants should retain the original documents for which only photocopies were submitted, for at least 3 years from the scrip issuance date as these documents may be called for by the licensing authority any time within the 3 years.
- If the original documents are not produced when the licensing authority demands it, the granted incentives will need to be refunded with the interest.
- The online application for EDI Shipments does not allow manual feeding by the applicants.
- To claim incentives under the MEIS, the ‘Let Export Date’ will be taken as the relevant date for determining the corresponding ITC (HS) code, product eligibility, and markets.
The procedure explained above can be used to claim rewards under the MEIS in all cases of exports except for e-commerce exports.
How to Claim Incentives for Exports through e-Commerce:
In cases where goods are exported through foreign post office or courier for e-commerce, incentives are awarded for goods with a FOB value of Rs.25,000 per consignment. Even for FOB value above Rs.25,000, the rewards are limited to Rs.25,000 only.
To claim rewards under the MEIS for export of goods through foreign post office or courier for e-commerce, the below-given procedure needs to be followed:
- The application for claiming incentives need to be filed online in Form ANF-3D with a digital signature.
- An express operator landing certificate needs to be submitted by the exporter as a proof of landing. An online web tracking print out indicating the airway bill number can also be submitted.
- Each port of export has to file a separate application.
- The Regional Authority will manually examine the submitted documents before granting scrips.
Categories which are not eligible for duty credit scrip under MEIS:
The following categories of exports are not eligible to receive duty credit scrip under MEIS (FTP 2015-20):
- Exports that originate in third countries but are transported through India
- Service export
- Supplies made from DTA units to SEZ units
- Cereals of all kinds
- Red sanders and beach sand
- Export products (subject to export duty and minimum export price)
- Concentrates and ores in all formation and of all types
- Sugar of all forms and types
- Gold, platinum, diamond, silver, and other precious metals in any form (including jewellery), and precious and semi-precious stones
- Petroleum oil/crude oil
- Export of meat and meat products
- Products studded with precious metals/stones
- Exports made by FTWZ units