Important Clarifications – MEIS & SEIS!!!

Clarification is better than anticipation

The outcome of the recent interactive sessions conducted by the Department of Commerce with all the stakeholders across the  SEZs & EOUs  between April 01, 2020 to April 10, 2020 came out   by way of Instruction No.K-43022/7/2020-SEZ dated April 29, 2020 which was issued by The Ministry of Commerce and Industry, Department of Commerce (SEZ Section).

Wherein many clarifications raised by the stakeholders was clarified pertaining to the FTP Schemes such as MEIS & SEIS in the current Instruction issued. All the inputs received so far from DGFT are listed below in detail along with writer’s view.

Sl. No. Issues raised by the stakeholders Comments of concerned Department Writer’s View
Issues pertaining to DGFT
1. In view of increase in the input costs and logistics for effecting exports becoming harder, revision in the MEIS and SEIS compensation may be increased by at least 2% for 2020-21. In view of the envisaged transition of MEIS to RoDTEP in the short term, any revision in MEIS rates is not feasible now. Further, Gems & Jewellery sector has never been covered ‘under MEIS. Considering the effects of current economic conditions and complicated situational effects, Also Introduction of upcoming new scheme RoDTEP, the Inputs given by the concerned authorities are valid and acceptable.
2. 5% additional export incentives may be given for one year to those units, which do not claim MEIS.
3. MEIS may be granted to exporters of diamond-studded jewellery.
4. The MEIS scheme benefits may not be denied merely because of some procedural issues in respect of Shipping Bills at the time of export. DGFT has desired that exact procedural difficulty may be explained to them. Authorities are seeking detailed explanations on the difficulties faced by the Applicants. Since, it is not possible to generalize the same
5 MEIS script may be made usable for non EDI Port/SEZ and applicable in respect of deemed manufacturers as well as FTWZ exports. Scripts issued from SEZ port cannot be used at any other non EDI/SEZ port, because the integration of the ICEGATE and SEZ database is not complete for a two way data transmission. FTWZ exports are not eligible for MEIS as per current policy provisions. The Authorities could have enabled the said option after considering necessary technical solutions. Since, it would have been beneficial to many exporters.
6 Services Export Incentive Scheme (SEIS) may be extended to cover more services: feasible wider SAC including software and units operating in International Financial Services Centre (IFSC) SEZ. Increasing the coverage to such services under SETS is not because of budget constraints. The authorities could have included at least few services which are facing terrible losses in the current serious scenario.
7 Policy issues pertaining to FTWZ Merchandise Exports from India Scheme eligible (MEIS) Scheme applicability: The Foreign MEIS Trade Policy 2015-20 has been extended coverage till 31.032021, however the benefits of MEIS to DTA manufacturers/exporters As per policy provisions, exports made by FTWZ units is not for MEIS. Further, In view of the envisaged transition of to RoDTEP in the short term, any expansion in MEIS is not feasible now. There is no misconception in the Policy provisions, Exports through FIWZ, but by a FTWZ unit is still ineligible. Considering the current economic conditions and complicated situational effects, the Inputs given by the respective authorities are valid and acceptable.

Conclusion:

Ministry of Commerce and Industry, Department of Commerce (SEZ Section) clearly made all its efforts to clarify majority of the crucial clarifications raised by the Stakeholders after obtaining the inputs from the respective authorities. However, the Authorities should also consider the difficulties faced by the exporters in detail and analyse the pros and cons which may arise in the current scenario for finalizing such additional benefits/ change in benefits covered under the aforesaid schemes.

-CA Sai Raghavendra Sumanth T

Writer can be reached at  email: tsr.sumanth@gmail.com

The information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualified professional adviser. Copying and sharing of the material without prior permission is restricted.

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