Amendments in MEIS to boost textile and apparel exports

In the last few months, the growth of textile and apparel exports from India had slowed down on account of various internal and external factors. Realizing the turmoil that Indian exporters were facing in global markets, Shri Santosh Kumar Gangwar, Union Minister of State for Textiles (I/C) had recommended a number of corrective actions to the Ministry of Commerce and Industry in consultation with industry stakeholders. One of the major recommendations was related to the enhancement of market coverage under Merchandise Exports from India Scheme (MEIS). The Textiles Minister would like to express gratitude to Smt. Nirmala Sitharaman, Minister for Commerce and Industry, for taking due note of the recommendations and amending MEIS as requested. The Export Promotion Councils and other trade bodies have also appreciated this timely action, which will lead to improvement of textile and apparel exports from India.

A Public Notice dated Oct 29, 2015 has been published by Director General of Foreign Trade (DGFT) regarding extension in duty incentives under the Merchandise Exports from India Scheme (MEIS). The duty benefit amendments as part of the allocation have been increased from Rs 18,000 crore to Rs 21,000 crore for MEIS. Textile and apparel sector has emerged as one of the major beneficiaries of the latest amendments in MEIS.

Launched in April 2015, the MEIS provided duty reward to eligible textile and apparel categories to an extent of 2% of FOB value in countries falling under Group A (Traditional markets – USA, EU-28 and Canada) and a single country in Group B (Emerging markets) viz. Japan. Later in July 2015, the scheme was amended wherein countries of Norway, Switzerland, Iceland and Liechtenstein were shifted from Group C (other markets) to Group A and 2% duty benefit was provided for fabric exports to Bangladesh and Sri Lanka.

Despite these additions, many important markets for yarn, fabrics, made-ups and garments like Latin American countries, Russia and CIS countries, Turkey, etc. remained uncovered for duty reward. Indian textile and apparel exporters had been demanding a more comprehensive market coverage to set off the disadvantage that they faced due to factors such as lack of FTAs with EU and USA, and higher interest and power rates than competing countries. The recent amendment in MEIS has addressed these concerns of industry, thereby improving industry sentiments.

In the recent amendment, the country coverage for all eligible textile and apparel categories has been extensively extended. Eligible categories under HS Code Chapters 50 to 63 are now eligible for duty reward of 2% to all countries of Group B, Group C and Group A countries. This means that the duty reward is now available to textile exporters in any country globally. For eligible apparel and made-ups categories under HS Code Chapters 61 to 63, the duty reward has been extended to all Group B countries in addition to Group A countries. Group B comprises of 140 countries covering important emerging apparel and made-up markets like South Africa, Russia, China and Hong Kong, East and West African countries, etc. Incentives in these additional markets would prove extremely beneficial to exporters.