- Launched: 1st January 2021 (implemented from 1st Jan 2021 after MEIS withdrawal).
- Administered by: Ministry of Commerce & Industry.
- Objective: To reimburse taxes/duties/levies incurred at the Central, State, and local levels that were previously not refunded under any other mechanism.
- Replaced the Merchandise Exports from India Scheme (MEIS), which was challenged at WTO for being WTO-incompatible (as it was seen as a “direct export subsidy”).
Key Features
- Scope: Covers all sectors, including labour-intensive industries such as textiles, agriculture, leather, marine, gems & jewellery, etc.
- Remission Covered:
- Embedded taxes/duties not refunded under any other scheme.
- Examples: electricity duty, VAT on fuel for transport, mandi tax, toll tax, coal cess, etc.
- Benefit Transfer: Via electronic credit ledger on the ICEGATE portal → transferable as duty credit scrips.
- Rates: Sector-specific rates (0.5% – 4.3% of FOB value, depending on product).
- Duration: 2021–2025 (initially approved with a budget of ₹12,454 crore).
Significance
- Ensures WTO compliance (unlike MEIS).
- Enhances export competitiveness by reducing hidden costs.
- Supports Make in India and aims to boost employment in labour-intensive sectors.
- Helps Indian exporters integrate better into global value chains.
Challenges
- Lower rates than MEIS benefits → exporters dissatisfied.
- Frequent delays in notifying sector-wise rates.
- Budgetary constraints restrict higher coverage.
- Limited awareness among smaller exporters.
UPSC Relevance
Prelims
- Administered by Ministry of Commerce & Industry.
- Objective: To reimburse embedded taxes/duties not refunded earlier.
- Replaced MEIS (due to WTO compliance issues).
Mains (GS-III: Economy / External Sector)
- Export Promotion: Role of schemes in improving competitiveness.
- WTO compliance: Balancing domestic policy with international obligations.
- Economic Impact: Support to MSMEs, job creation, trade deficit management.
- Limitations: Budgetary allocations, industry dissatisfaction.