Centre plans to scan large export companies that try to dodge cap on MEIS claims

Though export bodies have been asking the government to reconsider its decision to cap the Merchandise Exports from India Scheme (MEIS), the government is in no mood to relent and would be keeping a close eye on companies trying to avail the benefits by routing claims through their subsidiaries.

"There is a concern that big exporters would be trying to claim benefits by routing claims through their subsidiaries. We are keeping an eye out and would clamp down on any company that attempts to do this. Digitised data on all companies is available with us," a senior government official said.

Earlier this month, the government capped export incentives under the MEIS at Rs 2 crore per exporter on outbound shipments made during the period from September 1 to December 31, 2020.

The move comes after the Department of Revenue asked the commerce ministry to review the coverage of MEIS so that the fiscal benefits under the programme can be brought down to Rs 9,000 crore in the current financial year.

Industry experts and analysts have pointed out that the government's decision would affect large exporters, two-wheeler companies like Bajaj Auto and TVS Motor, and also those that export engineering products.

Export bodies have been trying to convince the government to reconsider its decision, as according to them, September-December exports have been made factoring in the benefits under the MEIS as part of the negotiations.

The MEIS was introduced in 2015 by merging five reward schemes. The scheme was brought to incentivise merchandise exports of over 8,000 items.

The government provides duty benefits depending on product and export destination. Exporters earn duty credits at fixed rates of 2 percent, 3 percent, and 5 percent.

The Department of Revenue had requested the commerce department to calibrate the MEIS incentives in a manner that it promote exports.