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India: Rebates may replace MEIS

India may replace the Merchandise Export Incentive Scheme (MEIS) with the Rebate of State and Central Taxes and Levies (RoSCTL) scheme. The Merchandise Export Incentive Scheme has to be withdrawn as it is not World Trade Organisation-compliant.

Instead the Rebate of State and Central Taxes and Levies scheme may be extended to all textile products. This scheme offers rebates on all taxes at the central and state levels to exporters of apparel and made-ups. Exporters are reimbursed all un-remitted input taxes paid at the state and central levels. Also this scheme is acceptable globally and also provides a competitive edge to Indian exporters.

Under MEIS, the bulk of garments and textile exporters, incentives are given to exporters equivalent to about four per cent of their export value in the form of duty credit scrips that can be used to pay customs duties and are freely transferable. As it is a direct export subsidy, and the textile sector’s phase-out period for such subsidies ended in 2018, it would have to be withdrawn soon. India has moved above the threshold of per capita gross national income of 1000 dollars, which makes it ineligible to offer export sops to any sector.

India’s exports officially crossed the threshold limit of 3.25 per cent of world exports in 2010 and the eight-year phase-out period is over.