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Commerce ministry working on new WTO-compliant export incentive scheme
Oct-19-2018

With an aim to boost exports in India, the commerce ministry is working on a new World Trade Organisation (WTO)-compliant export incentive scheme for merchandise shipments to replace the existing Merchandise Exports from India Scheme (MEIS). Currently, exporters of goods avail incentives under the MEIS. In this, the government provides duty benefits depending on product and country. The new scheme could be named as rebate of levies.

The formulation of the new export incentive scheme also assumes significance as the US has dragged India to the WTO’s dispute settlement mechanism over export subsidies and said that these incentives were harming American companies. The US has challenged India’s export subsidy programmes such as MEIS in the WTO, asserting that these initiatives harm its companies by creating an uneven playing field. Other export benefit programmes including Export Oriented Units Scheme, Electronics Hardware Technology Parks Scheme; Special Economic Zones; Export Promotion Capital Goods Scheme; and duty free imports have been challenged by the US.

As per the Federation of Indian Export Organisations (FIEO), the new scheme should include refund of indirect taxes like on oil and power; state levies such as ‘mandi’ tax and embedded tax. FIEO President Ganesh Gupta said the new scheme would help boost the country’s exports. Besides, India’s exports entered the negative zone after five months, contracting 2.15% in September to $27.95 billion even though the trade deficit narrowed to a five-month low of about $14 billion.

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