With the auto exporters and components sector already suffering due to the COVID-19 pandemic slowdown, companies are not able to claim adequate subsidies under the the Merchandise Exports from India Scheme (MEIS). Benefits under this scheme has been restricted to Rs 2crore per exporter from September 1 and benefits may be discontinued from January 1, 2021.
The MEIS provides incentive in the form of duty credit script to an exporter to compensate for his loss on payment of duties ranging from purchasing raw materials, manufacturing and shipping. Sources said the decision runs counter to the government’s plan to turn India into a production and exports hub for automobiles and related components. And the government is also planning to introduce the production linked scheme (PLS) for exporters of automobiles and spare parts in the coming months.
According to reports, automakers have been requesting the government to release payments and allow them to register the claims for the coming months which can be paid later. Exporters in other sectors have also been impacted due to the non-receipt of payments and the cap introduced by DGFT. In August, Bosch Ltd Chairman Bernhard Straub had said that it is important that the central government comes up soon with a comprehensive stimulus package for the automotive sector. He said the pandemic and the lockdown had disrupted established supply chains and showed the need for the industry as a whole to be more flexible and agile in its processes. “It is inevitable that the current situation will have less than favorable effect on our production and growth. We believe that it will take at least four to five hours for the auto industry in India to get back to normal. We may have to shift our gears down to tackle rough roads, but our engines of growth and our clear vision of the future will take us steadily forward,” Straub said.
