Apparel manufacturers and exporters can no longer avail of the Merchandise Exports from India Scheme (MEIS). The decision is expected to hit their cash flows and bottom line.

Under MEIS, garment and made-up firms were receiving four per cent of the free on board value of exports as incentives. MEIS has been scrapped retrospectively since March 2019. Apparel exporters have already booked orders by exact costing and they say if they had known they were not going to get the incentive, they would have acted differently. As it is the decision is expected to lead to losses and cash flow issues because between March to December whatever has been shipped will not get the MEIS benefits.

Also, the rebate on state and central taxes and levies has been compared with rebate on stare levies, creating a lot of confusion. And finally bringing in DGFT for correcting disbursal of benefits is expected to create problems. There is a special one-time additional ad hoc incentive of up to one per cent of free on board value for exports of apparel and made-ups with a cap of Rs 600 crores to offset the difference between the new rebate on state and central taxes and levies and the previous rebate on state levies plus MEIS from March 7, 2019 to December 31, 2019.