Various Schemes: The schemes that could face the heat include Merchandise Exports from India Scheme (MEIS), Export Promotion Capital Goods (EPCG) scheme and Interest equalization scheme (IES) for the textiles sector under the Foreign Trade Policy (FTP) 2015-20.
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.
