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Web Exclusive | July 2015

Knitted fabrics excluded from MEIS benefits!

The government has announced a revised list of textile products eligible for benefits under Merchandise Export from India Scheme (MEIS).The fresh list issued by the DGFT included exports of cotton fabrics to Bangladesh and Sri Lanka for 2% credit benefits, but excluded value-added items like knitted fabrics under MEIS scheme. Industry leaders opine that excluding knitted fabric from the list will have adverse impact on the country's exports.

In a fresh notification issued on July 16, the Directorate General of Foreign Trade (DGFT) revised the list of textile products and countries importing those products from India for giving credit benefits to exporters. As per the revised list, textile items shipped to European countries like Norway, Switzerland, Iceland and Liechtenstein will be eligible for duty credit scrip up to 5%. The fresh list also included exports of fabrics -- both woven and knitted traded under various HS codes— to Bangladesh and Sri Lanka for 2% credit benefits. The new norms came in to effect from July 14. However, the new list does not include value-added items like knitted fabrics under MEIS scheme. Exporters say that such a move will have negative impact on their competitiveness in the global market.

Reacting to the announcement, RK Dalmia, Chairman of the Cotton Textiles Exports Promotion Council (Texprocil), also said that the MEIS list should cover the entire range of products including knitted fabric and other value-added items like dyed and printed fabrics and made-ups. This will encourage small entrepreneurs involved in textile industry across the country

The Cotton Textiles Exports Promotion Council (TEXPROCIL) meanwhile welcomed the inclusion of exports of cotton fabrics - both woven and knitted - to Bangladesh and Sri Lanka under the Merchandise Exports from India Scheme (MEIS). The Director General of Foreign Trade announced a new list of textile items eligible for export sops, last week. MEIS was introduced in the Foreign Trade Policy 2015-20 announced recently. The scheme allows duty credit scrips at the prescribed rates of 2 per cent, 3 per cent and 5 per cent on exports of products to notified countries classified under Group A, B and C. "This is a very positive step taken by the Government as it will increase exports to these two countries. India can play a big role by supplying fabrics to Bangladeshi and Sri Lankan garment manufacturers as India is stronger in fabrics and the two countries are stronger in garment manufacturing," Texprocil chairman R K Dalmia said in a statement.

However, Knitted fabrics with H S (Harmonised System) Code 6006, which covers most of the knitted fabrics, including those with lycra, were left out in the list of items covered for export benefit. Knitted fabrics with lycra are value added products, that are being widely used in garments. Texprocil demanded that the entire range of fabrics should be covered under the benefit to avoid unintended exclusions. The MEIS has also not included exports of value-added and labour-intensive products like cotton dyed and printed fabrics and made-ups to different African countries like Mauritania, Mali, Dar Es Salaam, among others, Dalmia said. He urged the Government to include exports of knitted fabrics covered under HS code 6006 to Bangladesh and Sri Lanka and exports of value-added products like cotton dyed and printed fabrics and made-ups to African countries under the MEIS. These measures will give the much-needed impetus to exports in an otherwise adverse conditions in major markets, he said.

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