Ahead of a new export incentive scheme – Remission of Duties or Taxes on Export Products (RoDTEP)-to be rolled out from next year, the Director General of Foreign Trade (DGFT) recently issued a notice that the additional 2% benefits given under the existing Merchandise Export from India Scheme (MEIS) for all sectors, except garments and made ups, and including electronics manufacturing, would end on December 31.
With the additional benefits gone, the original incentive of 2%, 3% and 5% would remain until RoDTEP is put in place. The RoDTEP scheme, which is scheduled to replace MEIS from January 1, is yet to get cabinet approval.
“The lead time given to exporters is less. A minimum of three months should have been given,” said Ajay Sahai, Director General, Federation of Indian Export Organisations (FIEO).
The electronics manufacturing industry, for which the export incentive will dropped to 2% from 4% now, was sharper in its criticism of the Government move.
“This news is nothing less than a painful shock. At one end, the Government is talking about attracting investments to make India an electronics export hub, and at the other end, this export incentive is being withdrawn,” said Sanjeev Agarwal, Head of Manufacturing and Design at Lava. “We have already started to export, lined up investments and taken orders basis this 4% export incentive. We will have to cancel orders and fire people if the Government doesn’t reverse this.”
Lava recently won orders from US companies such as GE and AT&T to manufacture white-label devices.
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