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Exporters seek MEIS sops if US cuts benefits

Date: 22-02-2019
Subject: Exporters seek MEIS sops if US cuts benefits
As the dagger of US withdrawal of preferential benefits for $5.6 billion worth of exports hangs over India, exporters are seeking additional duty benefit for labour-intensive products under the Merchandise Export from India Scheme (MEIS).

They say such a move by the government will help them offset the loss due to imminent removal of the Generalised System of Preference (GSP), which allows duty-free or preferential access to some Indian products in the US market.

“It makes sense to compensate the GSP losses to (Indian) exporters so that they can reduce the duty in a way that the landed price of a product without the GSP in the US market remains the same as that with GSP. In the recent Board of Trade meeting with the commerce ministry, we proposed that for some of the employment-intensive sectors we can look at whether we can add additional benefits through MEIS for exports to the US only to offset the GSP loss,” Ajay Sahai, director and CEO, Federation of Indian Export Organisation (FIEO) told DNA Money.

MEIS was launched as a part of Foreign Trade Policy (FTP) in 2015. This five-year scheme merged five similar schemes and allocated Rs 22,000 crore per year to provide duty relief of between 2% and 5% to exporters.  

Last year, the Donald Trump administration announced that it would relook at India’s eligibility for the GSP following complaints from US dairy farmers and medical device manufacturers that said India’s tariffs were hurting their exports.

In November, the US had pulled back GSP benefits for 90 items. India was among the worst-hit countries as the move affected 50 products exported to the US. At that time, it had scrapped duty privileges worth $75 million from exports of certain musical instruments, leather, textiles, dairy and chemicals. India tends to be the most affected due to the reversal of duty privileges under the GSP as it is a major beneficiary of this programme. 

Trade differences between the two countries have resurfaced with the US showing its displeasure over India’s policies and rules in the e-commerce market, where two of the US online retail giants – Walmart and Amazon – are dominating. The other major sticky issue was data localisation. In a recent meeting with the commerce minister Suresh Prabhu, Washington had made it clear that it would review the GSP programme if it continued to adversely view US’s business interest in India.

Source: dnaindia.com

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