Pharma industry seeks support from the government on MEIS

The Indian pharma industry is reportedly facing a challenge in availing the Merchandise Export from India Scheme (MEIS) since April 2020, due to a system upgradation. To find an immediate solution, the pharma industry seeks timely intervention and support from the Ministry of Commerce and Industry.

MEIS is a key incentive scheme for exports which will be available to exporters only up to December 31 this year. From January 1, 2021, it is getting replaced with Remission of Duties and Taxes on Exported Products (RoDTEP).

RoDTEP is a scheme for exporters to reimburse taxes and duties paid by them such as value-added tax, coal cess, mandi tax, electricity duties and the fuel used for transportation, which is not getting exempted or refunded under any other existing mechanism. The present MEIS benefit varies from two per cent to five per cent, categorised on the basis of Country Group A, B & C and MEIS Reward Rate in percentage.

However, the current MEIS module does not allow exporters to apply for MEIS from April 2020 to August 2020. Reportedly, the MEIS module was removed for system upgradation, and this has left many exporters to struggle as they have received the previous year’s export payments and could not apply for MEIS.So, the Federation of Pharmaceutical and Allied Products Merchant Exporters has written a letter to Piyush Goyal, Minister of Commerce and Industry, Government of India, Ministry of Commerce and Industry informing about the stoppage of MEIS Scrips and its severe impact on the industry.

Kamlesh Shah, President, Federation of Pharmaceutical and Allied Products Merchant Exporters said, “In this competitive global market, a lot of factors play a very important role in the pricing and export incentives like MEIS have been quite important for exporters. Now in this challenging time, when the cash flow and funds are stressed, incentives like these, although it is small in nature, play a very important role to keep the business rolling. However, the MEIS scheme currently is not issuing any scrips to any of the exporters.”

“Exporters have completed their exports and also realised their payments in foreign exchange. They have completed all their export obligations but they are not able to apply for MEIS. It is likely that approximately Rs 500 crores in the pharma industry and overall approximately Rs 100 crores of Merchant Exporter’s funds have been blocked due to non-issuance of MEIS Scrips,” added  Shah.

Nipun Jain, Chairman, Small and Medium Pharma Manufacturers Association (SMPMA) expressed, “Due to the stoppage of MEIS scrip the pharma MSME players are financially badly hit. And its adverse impact has been seen on companies’ cash flow management. The industry continued with its commitment to ensuring uninterrupted supply of essential medicines even during the COVID -19 pandemic. However, if the stoppage of MEIS scrip continues, then we are afraid that it will have a severe impact on the industry from the financial perspective. Therefore, we urge the government authorities to ensure smooth functioning of the portal for the remaining days.”