Govt increases MEIS by 2%, manmade-fibre industry disappointed

Cotton textile exporters have welcomed the government’s decision to raise the Merchandise Exports from India Scheme (MEIS) by 2 per cent on labour intensive sectors.

While announcing the mid-term review of the Foreign Trade Policy 2015-20, the government on Tuesday increased MEIS by 2 per cent on all exportable goods including textile products.

Ujwal Lahoti, chairman of The Cotton Textiles Export Promotion Council (Texprocil) said, “The Mid Term Review of Foreign Trade is progressive, growth oriented. The government has recognised the urgent need to address the challenges being faced by the exporters on account of the roll out of the goods and services tax (GST) regime by focusing on reducing procedural burden”. 

Earlier the MEIS rates for garments and made ups were increased from 2 per cent to 4 per cent. With current increase, the MEIS has gone upto 6 per cent. The government also raised MEIS on cotton shopping bags to 5 per cent from the level of 3 per cent earlier.

However, cotton textile exporters urged the government to include cotton yarn under MEIS and extend 3 per cent Interest Equalisation Scheme to merchant exporters. Exporters have also urged the government to cover fabrics under rebate of state levies (RoSL) and increase MEIS rates for fabrics to allow domestic procurements against Export Promotion Capital Goods (EPCG) Authorizations and Advance Authorisations without payment of GST for export production.

“The enhanced MEIS rates will provide the much needed relief to exporters and will certainly have a positive impact on the overall exports especially of textile products,” Lahoti said and added, “The increase in the validity of duty credit scrips issued under the MEIS from 18 months to 24 months will increase the utility of such scrips.”

Meanwhile, the policy has disappointed manmade fibre segment. Srinarain Aggarwal, Chairman of The Synthetic & Rayon Textiles Export Promotion Council (SRTEPC) said that although the mid-term review had addressed a host of the issues from GST to ‘Ease of Trading’ across borders, it has grossly overlooked the manmade fibre segment of the country that has been reeling under GST with asymmetrical input taxes and inverted duty structure, besides facing fierce competition in overseas markets.

SRTEPC had sent various representations to the Ministry of Textiles and Ministry of Commerce and Industry, with request to increase MEIS rates on all the fabrics, made-ups and yarns of manmade fibres. Recently, it had sent a list of 167 MMF items in these categories to the Ministry of Commerce and Industry requesting to increase the MEIS rates. 

However, the mid-term policy review covers only seven fabrics and four made-up items which is a total disappointment for the manmade fibre textile segment of the country. According to the review statement to increase 2 per cent MEIS rates across the board for labour intensive MSME sectors leading to additional annual incentive of Rs 4,567 crore, the Council expects that the Government may shortly come out with another list of items with revised MEIS rates, Aggarwal said.

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