Merchandise Exports from India Scheme

Merchandise Exports from India Scheme
Name	Merchandise Exports from India Scheme
Abbreviation	MEIS
Introduced	2015
Replaced	Remission of Duties and Taxes on Exported Products
Administering authority	Directorate General of Foreign Trade
Country	India

Merchandise Exports from India Scheme

The Merchandise Exports from India Scheme provides export incentives for specified merchandise exports from India, administered by the Directorate General of Foreign Trade and framed within notifications of the Ministry of Commerce and Industry and the Government of India. Modeled against prior schemes such as the Duty Free Import Authorization Scheme and influenced by World Trade Organization Agreement on Subsidies and Countervailing Measures jurisprudence, the scheme aimed to boost exports to markets covered by agreements with trading partners such as the United States, the European Union, and members of the Association of Southeast Asian Nations.

Overview

MEIS was notified under the Foreign Trade Policy period managed by the Ministry of Commerce and Industry and administered by the Directorate General of Foreign Trade, offering transferable duty credit scrips to exporters. The scheme evolved amid negotiations involving the World Trade Organization, the Office of the United States Trade Representative, and the European Commission over export subsidies, with scrutiny paralleling disputes like the India — Export Subsidies cases. MEIS interacted with pan-India initiatives such as Make in India, Foreign Direct Investment policy shifts, and sectoral strategies aligned with the Goods and Services Tax rollout.

Eligibility and Coverage

Eligibility covered exporters registered with the Directorate General of Foreign Trade who exported notified goods to specified markets, with goods classified under the Harmonized System (HS), and recipients including importers in markets such as the United States, the United Kingdom, Germany, and China. Sectors targeted ranged from textiles and apparel represented by entities linked to the Apparel Export Promotion Council and the Confederation of Indian Industry to engineering goods associated with the Federation of Indian Export Organisations and pharmaceuticals connected to the Indian Pharmaceutical Alliance. Specific tariff lines and product groups were listed in appendices published by the Ministry of Commerce and Industry and referenced against the Integrated Tariff of India (ITC-HS).

Benefits and Incentive Structure

Under MEIS exporters earned duty credit scrips denominated as percentages of realized FOB value, based on notified product–market pairs, which were transferable and could be used for settling duties under the Customs Act, 1962 and miscellaneous cesses administered by the Central Board of Indirect Taxes and Customs. Rates were periodically amended by the Ministry of Commerce and Industry following consultations with stakeholders including the Textiles Committee and the Automotive Component Manufacturers Association of India. Incentives were designed to complement schemes such as the Export Promotion Capital Goods Scheme and interface with tax measures under authorities like the Central Board of Direct Taxes.

Application and Administration

Applications for MEIS scrips required filings through the Directorate General of Foreign Trade’s online systems, supported by electronic documents such as shipping bills and export invoices processed via the Indian Customs Electronic Data Interchange and the Goods and Services Tax Network. Administrative oversight involved periodic notifications, duty-scrip issuance, and reconciliation coordinated with agencies like the Reserve Bank of India for foreign exchange confirmations and the Ministry of Finance for budgetary allocations. Appeals and dispute resolution referenced statutory mechanisms under the Foreign Trade (Development and Regulation) Act, 1992 and adjudication by tribunals such as the Customs, Excise and Service Tax Appellate Tribunal.

Compliance, Monitoring and Enforcement

Compliance checks entailed verification of export documents, audits by the Directorate General of Foreign Trade, and coordination with customs formations under the Central Board of Indirect Taxes and Customs; enforcement actions could include denial of scrips, recovery proceedings, and penalties pursuant to the Customs Act, 1962 and the Foreign Trade (Development and Regulation) Act, 1992. Anti-circumvention and anti-fraud measures referenced precedents from disputes involving the World Trade Organization and domestic cases adjudicated by the Supreme Court of India and various high courts, while data-driven monitoring used inputs from the Ministry of Electronics and Information Technology and trade statistics compiled by the Ministry of Commerce and Industry’s Directorate General of Commercial Intelligence and Statistics.

Impact and Criticism

Proponents argued MEIS supported export competitiveness for players represented by the Federation of Indian Export Organisations, Confederation of Indian Industry, and sectoral councils, contributing to export growth in sectors tracked by the Reserve Bank of India and the World Bank. Critics—including representatives from the United States Trade Representative and scholars associated with institutions like the Indian Council for Research on International Economic Relations—contended that MEIS constituted prohibited export subsidies under World Trade Organization rules and created fiscal costs flagged by the Union Budget and the Comptroller and Auditor General of India. Empirical assessments by academics at universities such as the Indian Statistical Institute and policy think tanks like the Observer Research Foundation debated effects on competitiveness, trade diversion, and compliance burdens.

Amendments and Historical Development

MEIS succeeded earlier incentives such as duty drawback variants and coexisted with schemes like the Interest Equalisation Scheme until significant revisions were proposed following World Trade Organization adjudications and bilateral consultations with entities including the Office of the United States Trade Representative and the European Commission. Subsequent policy shifts led to phased replacements, integration with the Remission of Duties and Taxes on Exported Products framework, and discussions within parliamentary committees such as the Standing Committee on Commerce and policy reviews by the Ministry of Commerce and Industry.

Category:Trade of India Category:Export promotion