Audit Reveals Irregularities in Foreign Trade Policy Incentives

The Comptroller and Auditor General's report criticizes India's Commerce Ministry and customs for irregularities in MEIS and SEIS scheme benefits under the Foreign Trade Policy 2015-20, affecting Rs 725 crore. Issues like misclassification, incorrect incentives, and systemic flaws in scrip issuance were highlighted, necessitating automated and uniform processes.

The Comptroller and Auditor General of India has flagged significant irregularities in the administration of the Merchandise Exports from India Scheme (MEIS) and Services Exports from India Scheme (SEIS) under the Foreign Trade Policy 2015-20. These discrepancies have a massive revenue impact estimated at Rs 725 crore.

According to the report, the Commerce Ministry and customs department failed to halt the issuance of incentives even after the schemes had been officially discontinued. This oversight resulted in a substantial number of licences being issued, causing significant revenue leakage. The Directorate General of Foreign Trade faces challenges in ensuring only eligible entities receive benefits, particularly in sectors like Apparels and Made-ups.

Systemic issues such as issuance of scrips to entities on the 'Denied Entity List' have surfaced, compelling the CAG to recommend full automation and a cohesive alignment in service classifications to curb future inconsistencies. Enhanced validation controls are also advised to streamline the implementation of such foreign trade schemes.

(With inputs from agencies.)