As exports contracted for a tenth straight month in September, the commerce ministry on Friday raised support to outbound shipments of more products–including textile, telecom and electronic items–under the Merchandise Exports from India Scheme (MEIS) in a desperate bid to arrest the slide.
The latest revision of the MEIS introduces 110 new tariff lines and increases the duty benefit rates or the country coverage, or both, for 2228 existing tariff lines, the commerce ministry said on Friday. The ministry’s move to partially tweak the MEIS by providing more incentives to exporters came after the finance ministry had agreed to raise the allocation for the scheme to Rs 21,000 crore for the current fiscal from Rs 18,000 crore announced earlier.
Under the MEIS, the government provides exporters duty credit scrip at 2%, 3% and 5% of their export turnover, depending upon the product and the country, as envisaged in the foreign trade policy 2015-20. The scrip can be transferred or used for payment of a number of duties, including the basic customs duty.
Exports of select textile items, pharmaceuticals, project goods, auto components, telecom, computer, electrical, electronics and railway transport equipments–which used to get duty benefits only for a few countries–would be entitled to global support.
Similarly, higher support has been granted to certain categories of products, such as industrial machinery, parts and machinery for dairy, agriculture, food processing, textiles sectors, many of which are manufactured by MSMEs. Even readymade garments and handmade woolen shawls have been offered more support, while additional countries have been covered for selected leather products, iron, steel, and base metals.
The move will likely help improve competitiveness of a large number of exporters and help them tide over the difficult global economic scenario.
India’s merchandise exports plunged 24.3% in September from a year earlier, having recorded contraction in each month since December 2014, as a crash in commodity prices and a global slowdown hurt shipments of petroleum products, iron ore, and engineering goods.
The Cotton Textiles Exports Promotion Council ( TEXPROCIL) has hailed the inclusion of exports of cotton fabrics – both woven and knitted — and madeups to leading markets, including Africa. TEXPROCIL chairman RK Dalmia said cotton fabrics exports could rise 10-15% annually and India can offer products at competitive prices. He added that the inclusion of various categories of knitted fabrics under the MEIS will also encourage exports of knitted fabrics.
India targets to raise exports of goods and services to $900 billion by 2020 and increase the country’s share in world exports to 3.5% from the current 2%. However, merchandise exports in the past four years have been hovering around $300 billion. With global demand for commodities remaining tepid, the task seems herculean. The World Trade Organization had in September lowered its global trade growth forecast for 2015 to 2.8%, compared with 3.3% projected in April, and also trimmed the estimate for 2016 to 3.9% from 4%