The government has extended the rewards under its merchandise and services export from India schemes to units located in special economic zones.
Special economic zones are areas — usually located close to seaports or airports — where normal custom, labor and tax laws of the country do not apply. In many ways, companies in SEZs operate as if they are not on Indian soil.
These are created to encourage foreign companies — which are vary of India’s law — to set up manufacturing or services units, which in turn helps generate employment.
SEZs are also used to lower regulatory and tax burden on export-oriented Indian companies to make them more competitive in foreign markets. As a result, typically, the benefits of the Merchandise Exports from India Scheme (MEIS) and Services Exports from India Scheme (SEIS) were not extended to SEZ units.
However, said commerce minister Nirmala Seetharaman today, the government has decided to extend these privileges to SEZ units as well.
The primary reason for doing so to help boost India’s flagging exports, but it will also help manufacturing sector to obtain technology from overseas and generate even more employment, she said today.
India’s goods export growth has slowed in recent years. For the first eleven months of the ongoing financial year, the value of exports increased just 2.5% over the same period in the previous year.
Under these two reward policies, exports of goods or services to foreign countries are rewarded with ‘scrips’ which can be submitted to the government in lieu of money when paying custom duties, excise duties, service tax and so on.
The rewards range from 3% of the total value of goods and services exported to 5%. The scheme were put in place as part of India’s Foreign Trade Policy 2015-2020.
In addition to SEZ units, MEIS benefits will also be available to ecommerce sales to overseas customers for items classified as handloom products, books and periodicals, leather footwear, toys and customized fashion garments through courier or foreign post office. The maximum value of a single order can be up to Rs 25,000 to qualify for the scrips.
The scrips have also been made fully transferable, Nirmala Seetharaman said.