Port Wings News Network:
Despite increasing protectionism, global economic growth is looking promising in 2018, Mr Ganesh Kumar Gupta, President, FIEO, has said.
Addressing the media in New Delhi on 29 May 2018, Mr Gupta said, “Indian exports, which are hovering around USD 300 billion, should exhibit 15-20% growth so as to reach around USD 350 billion during the current fiscal. The northward movement in petroleum and commodity prices would also add to export growth. The recent depreciation of Indian Rupee is also supporting exports though its impact varies from sector to sector and from company to company.”
Product Market Strategy to Boost Exports
Mr Gupta said that we need to identify the champion sectors and provide them fiscal and non-fiscal support so that we increase our exports both in advanced and emerging economies. A product market mix strategy will help in increasing exports exponentially.
FIEO feels that Government will pro-actively engage with our trading partners particularly with US so that the trade interest of the country is safeguarded.
Job Creation in Exports
While growth in exports in 2017-18 has helped in creating additional jobs in the sector, the performance of some of the labour intensive sectors like apparel, leather, carpets, handicraft, gems & jewellery, etc. has definitely dented the job creation opportunities in these sectors.
Liquidity is a Major Concern for Exporters
President, FIEO said that liquidity is a major area of concern particularly for MSME exporters who constitute the bulk of exports in high employment intensive sectors. The challenges on GST front are continuing though the fortnight clearance drive, which was highly successful, gave us the hope that refund will be provided on real time basis. While claims over Rs.7000 crore were cleared during March, 2018, the amount in April, 2018 is little over Rs.1000 crore. As per our estimate, refund over Rs.20,000 crore are pending on account of IGST and ITC and many exporters have not been able to file the refund of ITC due to technical glitches as input tax credit and exports happened in different months. The GST refund process has considerably slowed down after the clearance fortnight. FIEO urges the Finance Minister to look into the refund problem and organize a clearance drive to liquidate the pendency and bring the refund process on track.
Majority of the problems relates to ITC refund which have to be done by the States as well. The manual intervention in the refund process has added to the transaction time & cost of exporters.
The major challenge lies on ITC refund for various reasons :
(a) The process of ITC refund is partly electronic and partly manual which is cumbersome and add to the transaction cost.
(b) The tax authorities are reluctant to accept the applications and raise piecemeal objections asking for irrelevant documents including copy of bank realization certificate.
(c) The refund formula to apply for refund for a relevant period has not been modified in the software with the result a large number of exporters could not file their claim for ITC refund.
(d) The tax authorities have not been trained in GST Law, Rules & Regulations delaying the refund of exporters. The process which requires the State Authorities to process the refund of SGST and forward it to Central Authority for payment of CGST and vice-a-versa is quite time consuming. In many cases, while one authority has sanctioned the component of tax under its jurisdiction, the other authority either delayed it or yet not issued it.
- e) The provision that 90% of ITC refund will be issued within 7 days is not being implemented by tax authorities. Some of the States say that they do not have funds to clear the ITC refund.
Issues relating to IGST Refund:
(a) The problem of refund of IGST at ICD continues. The EGM, if incorrectly filed by the shipping lines, delay the refund process. In many cases, when shipping companies file the correct EGM, ICEGATE reject such EGM. The exporter is tossing between customs and shipping lines. Government should accept the onboard copy of bill of lading and clear the IGST refund as has been done for invoice error.
(b) The Refund for Exports from Non-EDI Ports has not yet started which is affecting India’s exports to its neighbouring countries particularly Nepal & Bangladesh.
(c) The IGST refund has slowed down after March, 2018 and most of the exporters are waiting for their IGST refund for the month of April or even for a prior period.
(d) In many cases, the drawback rate (both higher & lower) is the same. While one rate is given in Column-A the other is given in Column-B. If exporter has wrongly mentioned A, the GST refund for the month of July-Sept is denied while the exporter has not claimed higher drawback since both rates of drawback are the same.
Issues relating to GSTN :
(a) The GST data was hitherto being captured on monthly basis but from February onwards, the same is captured on cumulative basis. Therefore, if there is an error in GST return for any month, the cumulative figure will also be incorrect. With the result, the refund to such exporters have virtually dried from February 2018 onwards.
(b) The error in GSTR-3B has not yet been allowed to be rectified affecting the refund for the export sector.
Export Schemes to Provide Exemption from IGST and Pre-Import Condition on Advance Authorization be withdrawn
President, FIEO said that exemption from IGST should be extended on permanent basis to advance authorization, EPCG, EOU as the exemption is only till 30th September, 2018. Moreover, the pre-import condition imposed on advance authorization for availing IGST exemption should be withdrawn ab-initio as the same is adversely impacting inventory management of exporters forcing them to go for imports in one go thus further compounding their liquidity problem. Exporter who could have taken the inputs from the domestic sources to meet the delivery schedule is forced to wait for imports which affect the domestic companies as well.
Banks to Provide Support to Exports Particularly to Sector Not Doing Well
The tough stand taken by banks have also affected the flow of credit. Withdrawal of letter of offer and letter of comfort has added to the cost of the exporters raising it by 1% to 3%. Sectors which are not doing well and require the maximum support are the worst hit due to rigid approach of the banks. FIEO said that while banks should adhere to the procedure, they have to be pro-active to the needs of the exports sector.
Rupee Depreciation to Help Exports Though Its Impact Varies
Indian Rupee has been the worst performing currency in Asia and therefore, Indian exporters have gained over their competitors in Asia. However, many exporters who have hedged their risk or who have taken pre-shipment credit in foreign currency (PCFC) have not benefited due to depreciation of Rupee. The sectors having high import intensity like gems & jewellery, petroleum, electronics hardware, etc. have marginally benefitted as they have taken a hit on their imports. The depreciation has helped the traditional sectors of exports like handicrafts, carpets, marine products, agro-processed products, sports goods, apparels & textiles, leather, etc. which are primarily depending on domestic inputs.