No incentives for exports to Nepal, Bhutan

CHANDIGARH:Punjab-based engineering goods manufacturers are in catch-22 situation. On the one hand, they are facing slowdown in exports to European countries, on the other hand, exports to neighbouring countries such as Nepal and Bhutan are becoming unviable in the absence of any incentive from the Centre under Merchandise Exports from India Scheme (MEIS) and stiff competition from China.

Illustration: Sandeep Joshi

Vijay C Roy

Tribune News Service

Chandigarh, January 14

Punjab-based engineering goods manufacturers are in catch-22 situation. On the one hand, they are facing slowdown in exports to European countries, on the other hand, exports to neighbouring countries such as Nepal and Bhutan are becoming unviable in the absence of any incentive from the Centre under Merchandise Exports from India Scheme (MEIS) and stiff competition from China.

Punjab alone exports engineering goods such as auto parts, cycle parts, fasteners, valves and hand tools worth Rs 500 crore to these two countries annually.

According to Commerce Ministry officials, as per Foreign Trade Policy 2015-2020, the reward under MEIS is admissible on value of exports realised in foreign currency only and not in Indian rupees. Since exports to these countries are done in Indian rupees, the exporters are not entitled to any incentive under the MEIS.

“There is a huge potential for export of engineering goods to these countries. The MEIS incentives range from 3-8% depending on kinds of goods exported. So if the government introduces incentives for the exporters, the exports will further get fillip,” said Engineering Export Promotion Council’s deputy director Opinder Singh.

Singh had recently raised the issue with Union Commerce Secretary Anup Wadhawan who was in the city recently to interact with exporters.

“Even if we are exporting in Indian rupees, we are creating employment and contribute to the economic development of the country. Considering this, the government should introduce MEIS scheme for exports to any nation, including Nepal and Bhutan,” said a Batala-based exporter who exports machinery to Nepal and Bhutan.

According to the exporters if the same goods are exported to other countries, they are entitled to incentives, but slowdown in European countries and the US has impacted the exports. According to the Commerce Ministry data, the engineering goods — the second largest export item after petroleum products — posted a 16.35% fall in November 2018 to $5.9 billion as compared to the same period in 2017.

The exporters believe that introduction of MEIS will increase Punjab engineering goods’ exposure to these two countries, as they will be able to compete with Chinese engineering goods.

“We export e-rickshaw batteries to Nepal and see a lot of potential there, but the absence of incentives restricts our exports as margins are very thin and competition is tough from China,” said Action Batteries’ general manager Rajesh Handa.

“MEIS claims should also be applied to exports made in Indian currency. The procedure to apply MEIS claims online should also be simplified so that exporters can themselves apply for MEIS claims,” said Opinder Singh.

Exports to Nepal, Bhutan from Punjab

Current value: Rs 500 crore annually Items exported: Auto parts, cycle parts, fasteners, valves
Stumbling block: Absence of incentives
Exporters’ demand: Introduction of MEIS