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Exclusive | Lack of funds may end government incentives for services exports

Facing a funds crunch, and under international pressure by the WTO to realign the benefits it gives traders, the government had suspended the Merchandise Exports from India scheme (MEIS). Now, a similar scheme focusing on services exports may face the axe.

March 30, 2021 / 05:19 PM IST
Representative image of hotel lobby. Travel and hospitality accounts for the third largest chunk of services exports after IT and Business services.

Representative image of hotel lobby. Travel and hospitality accounts for the third largest chunk of services exports after IT and Business services.

After shutting down India’s largest trade promotion scheme for goods, the government may discontinue the only central scheme promoting the export of services.

Even if the flow of benefits to exporters is not completely stopped, the government may slash incentives significantly in the upcoming Foreign Trade Policy, sources in the know said. While the Commerce Department was keen to continue with the Services Exports from India Scheme (SEIS), stiff opposition from the Finance Ministry, which has recently tightened its purse strings owing to a funds squeeze — may lead to its reduction or even total demise, a senior Commerce Department official said.

A fillip for services exports

Introduced in the Foreign Trade Policy (FTP) 2015-2020, the SEIS is considered by the Commerce Department to have been successful in boosting the scale of India’s overall services exports. Incentives worth Rs 4,262 crore were disbursed to services exporters in 2018-19 as part of SEIS.