What is MEIS: Everything about Merchandise Export Incentive Scheme in India

The primary aim of the Merchandise Export Scheme in India was to stimulate production and export of designated goods and products. The MEIS award was to be computed based only on Free on Board (FOB) value of INR 5 lakh if the value of exports is greater than INR 5 lakh per shipment. Under this program, duty credit scrips, which are offered to exporters as awards, can be freely transferred and serve the following purposes⁴:

(i) Settling the Basic Customs Duty and Additional Customs Duty outlined in sections 3(1), 3(3), and 3(5) of the Customs Tariff Act, 1975, for the import of various items, including inputs and capital goods, as per the Department of Revenue Notification, except for those mentioned in Appendix 3A.
(ii) Covering the Central excise duties on the domestic procurement of inputs or goods.
(iii) Covering the Basic Customs Duty and Additional Customs Duty specified in Sections 3(1), 3(3), and 3(5) of the Customs Tariff Act, 1975.

Duty credit scrips can be employed to cover customs duties when importing inputs or goods, including safeguard duty, anti-dumping duty, and any other customs duty. Although MEIS has been discontinued and replaced by the RoDTEP scheme, earlier, exporters had the option to request a division of the duty credit scrip, with each portion having a minimum value of INR 5 lakh. This request could be made even after the scrip had been issued, provided it was done through the same registration port as initially applied for. However, this procedure was applicable only for ports that are Electronic Data Interchange (EDI) enabled. In the case of non-EDI ports, it was not possible to split a duty credit scrip once it had been issued. The MEIS scheme offered exporters the flexibility of importing and settling payments, and it eliminated many structural inefficiencies present in the previous incentive schemes⁵.

There were previously five different programs to reward export of goods with various duty credits, each with a unique set of restrictions. The Merchandise Exports from India Scheme replaced these programs. The MEIS duty credit scrip was the vehicle through which rewards under the MEIS benefits were paid out as a proportion (2%, 3%, or 5%) of the realised FOB value of covered exports. Customs, excise, and service taxes were just a few of the duties and taxes that could be paid with the scrip. The transferability of scrip inputs and scrip outputs was complete. Consequently, exporters had a lot more options⁶.

Below are some of the points that were the criteria to determine the eligibility for MEIS⁷:

1. Any exporter, whether a merchant or manufacturer exporter, could avail incentives under MEIS if their export products were listed in Appendix 3B of MEIS Schedule.
2. Eligibility was solely based on the type of product being exported.
3. Special Economic Zone (SEZ) Units and Export Oriented Units (EOU) were eligible to claim benefits under MEIS.
4. There was no specified minimum turnover requirement to qualify for MEIS benefits.
5. Products exported through e-commerce platforms via courier were also eligible for MEIS benefits.
6. The exported product must have been of Indian origin; products that were re-exported were not eligible.
7. Shipping bills that included the Declaration of Intent and had the Scheme reward option marked as YES were eligible for the MEIS Scheme.

To establish the arrival of an export consignment in a designated market, the exporter could provide the following documents⁷:
1. A self-attested copy of the import bill of entry submitted by the importer in the specified market.
2. A delivery order issued by the port authorities.
3. An arrival notice issued by the goods carrier.
4. Scanned copies of documents such as a tracking report from the goods carrier (shipping line/airline, etc.) or their accredited agent in India, duly certified by them, demonstrating the arrival of the export cargo at the destination market.
5. In the case of a landlocked designated market, rail/lorry receipts for the transportation of goods from the port to the landlocked designated market.
6. Any other document that could effectively demonstrate to the relevant Regional Authority (RA) that the goods had landed in or reached the designated market.

To claim duty credit scrip entitlements under MEIS, exporters had to submit an online application using Form ANF 3A with a digital signature. Along with the application, they had to provide physical copies of the following documents to the Directorate General of Foreign Trade (DGFT)⁵.
● Electronic data interchange (EDI)
● Shipping bills
● E-bank realisation certificate (e-BRC)
● Registration-cum-membership certificate (RCMC)

1. However, if they applied through EDI-enabled ports, there was no need to submit physical copies to acquire MEIS benefits; instead, they only had to provide export promotion copies of non-EDI shipping bills and proof of landing.
2. Separate applications for each port had to be submitted.
3. The application had to be filed within one of the following timeframes, whichever was later:
● Within 12 months from the Let Export (LEO) date.
● Within 3 months from the date of either the customs uploading the EDI shipping bills onto the DGFT server or the printing of shipping bills for non-EDI shipping bills.

Duty credit scrip entitlement under MEIS was not granted to the following export categories/sectors⁷:

(i) Exporting entities like EOUs (export-oriented units), electronic hardware technology parks (EHTPs), biotechnology parks (BTPs), and software technology parks (STPs) that are benefiting from direct tax advantages or exemptions.
(ii) Exported goods originating from units in the Domestic Tariff Area (DTA) to Special Economic Zone (SEZ) units.
(iii) Exports of imported goods as described in paragraph 2.46 of the Foreign Trade Policy (FTP).
(iv) Exports involving trans-shipment, which referred to goods that had their origin in a third country but were routed through India.
(v) Deemed exports
(vi) Products from SEZ/EOU/EHTP/BPT/FTWZ units that were exported through units in the Domestic Tariff Area (DTA).
(vii) Items that were either prohibited or restricted for export according to Schedule 2 of the Export Policy in the ITC (HS) unless they were explicitly mentioned in Appendix 3B.
(viii) Red sanders and beach sand.
(ix) Exported products that were subjected to a minimum export price or export duty.
(x) Precious materials like diamonds, gold, silver, and platinum, as well as other precious metals in any form, including plain and adorned jewellery, and other precious and semi-precious gemstones.
(xi) Ores and concentrates of all types and from all sources
(xii) Various types of cereals.
(xiii) Sugar in all its forms.
(xiv) Crude petroleum oil, primary petroleum products, and base products in all varieties and compositions.
(xv) Export of milk and milk products.
(xvi) Export of meat and meat products.
(xvii) Products that incorporate precious metals or diamonds or items adorned with precious stones.
(xviii) Exports conducted by units in Free Trade Warehousing Zones (FTWZ).