MEIS scheme: Under the MEIS the government doesn’t provide any cash subsidy but rewards merchandise exporters with duty credit scrip at 2%, 3% or 5% of their export turnover with subject to conditions. The potential revenue forgone by the exchequer on account of this scheme is estimated at 22000-23500 crore a year.
EPCG scheme: The EPCG scheme provides for capital goods imports at zero duty subject to an export obligation of six times of the duty saved to be fulfilled in six years. Concessional/nil import tax on capital goods under the EPCG scheme is linked to specified export obligations. Although India treats them as WTO-compatible the US and EU reckon the duty relief is an export contingent subsidy that is actionable under the WTO.
