A limit has been imposed on total rewards under the Merchandise Exports from India Scheme (MEIS).  A notification issued by Directorate Generate of Foreign Trade (DGFT) last evening says that the total reward which may be granted to an IEC holder under the scheme shall not exceed ₹ 2 Crore per IEC of exports made in the period 1.9.2020 to 31.12.2020.  Further, it has also been informed that any IEC holder who has not made any exports for a period of one year preceding 1.9.2020 or any new IECs obtained on or after 1st September would not be eligible for submitting any claim under MEIS.  In addition, MEIS Scheme is withdrawn w.e.f. 1.1.2021.  The above ceiling will be subject to further downward revision to ensure that the total claim under MEIS for the period 1.9.2020 to 31.12.2020 does not exceed prescribed allocation by the Government which is ₹ 5,000 Crore.

It is estimated that 98 per cent of the exporters’ claim of MEIS will be unaffected by the changes.  The unaffected exporters who have already factored in MEIS in the pricing of their products do not face any change or uncertainty since neither coverage of products nor rates of MEIS will be changed.  An advance notice of 4 months of the end date of MEIS provides certainty for the future pricing decisions.

Cap on export incentive eligibility limits MEIS claims; scheme withdrawn from 1 January 2021. A temporary cap on MEIS rewards limits total benefit payable per IEC for exports from 1.9.2020 to 31.12.2020 and may be further reduced to keep aggregate claims within the Government's allocation; IECs with no exports in the year before 1.9.2020 and IECs obtained on or after 1.9.2020 are ineligible to claim, and the MEIS is withdrawn with effect from 1.1.2021.