The Comptroller and Auditor General (CAG) on Thursday pulled up the Commerce Ministry and customs department for irregularly granting MEIS and SEIS benefits under the Foreign Trade Policy 2015-20, resulting in a revenue impact of Rs 724.96 crore. The audit found that even after the schemes were discontinued, a substantial number of licences were issued, leading to an outflow of incentives in the form of duty credit. The CAG recommended that the Directorate General of Foreign Trade (DGFT) instruct Regional Authorities to recover duty credits, particularly in the Apparels and Made-ups sector, which is now eligible under the RoSCTL scheme.

The audit revealed that under the MEIS scheme, benefits worth Rs 132.21 crore were irregularly granted due to allowance of ineligible products, misclassification of exported goods, adoption of incorrect incentive rates, and non-realisation or realisation of export proceeds in Indian Rupees. Similarly, the SEIS scheme saw Rs 406.90 crore wrongly granted because of inadmissible services, misclassification of services, incorrect calculation of foreign exchange earnings, non-exclusion of government taxes, and incorrect adoption of exchange rates.

Systemic issues, such as issuing scrips to firms on the ‘Denied Entity List’ and to firms whose names did not match their unique identifiers, caused an additional revenue implication of Rs 185.85 crore. The CAG urged the department to fully automate the licence issuance process, strengthen validation controls, and ensure uniform classification of services to reduce manual intervention, minimise delays, and prevent misuse of incentives.