Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation
Date: 03.07.2026
Delhi High Court Quashes Retrospective Withdrawal of MEIS Benefits for FIBC Exporters
This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .
The Delhi High Court recently delivered a landmark judgment in favor of the Indian Flexible Intermediate Bulk Container Association (FIBC Association), addressing the retrospective withdrawal of export incentives under the Merchandise Exports from India Scheme (MEIS) for FIBC bags. This decision has significant implications for exporters and the broader Indian export policy framework.
Background: The MEIS Scheme and FIBC Sector
Flexible Intermediate Bulk Containers (FIBC), commonly known as Jumbo Bags, are a major export product for India, contributing nearly USD 1 billion annually and employing thousands across the country. The MEIS scheme, introduced under the Foreign Trade Policy (FTP) 2015-2020, provided crucial incentives to exporters of FIBC bags, helping India capture a substantial share of the global market.
The Controversy: Retrospective Withdrawal of Benefits
On 29th January 2020, the Directorate General of Foreign Trade (DGFT) issued a notification retrospectively withdrawing MEIS benefits for FIBC bags, effective from 7th March 2019. Exporters argued that this sudden and retroactive change caused severe financial losses, as export contracts had been priced with the expectation of receiving MEIS incentives. The FIBC Association challenged the notification, contending that such retrospective withdrawal was arbitrary, unlawful, and unsupported by statutory authority.
Key Arguments
Petitioner’s Stand
- Unlawful Retrospective Application: The FIBC Association argued that the Foreign Trade (Development and Regulation) Act, 1992, does not empower the government to make retrospective amendments to export policies.
- Financial Harm: Exporters had factored MEIS benefits into their pricing, and the retrospective withdrawal led to significant losses.
- Lack of Alternative Benefits: The replacement scheme, RoSCTL, offered no benefit (“Nil” rate) to FIBC exporters, leaving them without any support.
Government’s Defense
- Policy Discretion: The government claimed the right to amend or withdraw export incentives in the public interest.
- WTO Compliance: The withdrawal was partly in response to World Trade Organisation (WTO) obligations.
- Transition to RoSCTL: The government argued that exporters were aware of the transition to the RoSCTL scheme, though FIBC bags received no benefit under it.
Court’s Analysis and Findings
The High Court examined the statutory framework and relevant Supreme Court precedents. It found:
- No Statutory Authority for Retrospective Withdrawal: Section 5 of the FTDR Act, 1992, does not permit retrospective amendments to export policies unless expressly provided by law.
- Principle of Natural Justice: Retrospective withdrawal of benefits, especially without prior notice, violates principles of fairness and equity.
- No Double Benefit: Since FIBC bags received no benefit under RoSCTL, the argument of preventing double benefits was unfounded.
- Arbitrariness and Discrimination: Selectively withdrawing benefits for FIBC bags, while other products continued to receive support, was arbitrary and discriminatory.
The Judgment: Relief for Exporters
The Court ruled in favor of the FIBC Association, issuing the following directions:
- Prospective Application Only: The notification withdrawing MEIS benefits for FIBC bags will apply only prospectively, not retrospectively.
- Processing of Claims: The government must process and grant MEIS benefits for FIBC bag exports made between 7th March 2019 and the date of the notification, provided applications were submitted as per the Court’s interim order.
Impact and Significance
This judgment restores crucial export incentives to the FIBC sector for the disputed period, providing much-needed relief to exporters. It also sets an important precedent, reinforcing that government policy changes affecting incentives must not be applied retrospectively without clear legislative backing.
The decision upholds the principles of fairness and legal certainty in India’s export policy regime.
Connected Matter
Source: Delhi High Court
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