The Merchandise Exports from India Scheme (MEIS) may be replaced by a new duty refund scheme called the Rebate of State and Central Taxes and Levies (RoSCTL).
A four per cent incentive is given to garment exporters under the MEIS. But in the meantime the uncertainty is creating confusion among exporters. Changes have been announced under the RoSCTL but its implementation is still awaited. Exporters will be given revised reimbursement under the new scheme but they say that before abolishing any existing scheme it should be given at least four to six months’ time. They fear losses as they have quoted prices after factoring in the four per cent incentive under the MEIS. Facing competition from Vietnam and Bangladesh they cannot think of increasing prices. For them the four per cent incentive under the MEIS will be replaced by an eight per cent loss on an average, which they feel they won’t be able to bear. The loss of international markets is expected to lead to the shutdown of many small cottage units.

The proposal to replace the scheme has rattled the apparel sector of the north, mainly concentrated in Ludhiana and the NCR region. Over 1,600 small and big units in Gurugram alone have stopped taking and processing any international orders. Many ancillary units have even asked labor to look for alternate jobs in the next few months.