Indian exports have witnessed upward trend in last few months with export of USD 275 billion in last fiscal and the Federation of Indian Export Organisations, the apex body of Indian exporters, is bullish to achieve a new milestone of USD 325 billion in 2017-18.
Meanwhile, FIEO has made a presentation before the Ministry of Commerce suggesting that while support to all sectors of exports may continue, additional support may be given to products figuring in top 200 products of global imports at 6 digit level. “Our share in these 200 products is presently at 1.43% and an increase of share by 0.5% can add to over USD 80 billion in country’s exports,” underlined Mr Ganesh Gupta, President FIEO at a media conference held on May 25 in New Delhi. He, however, voiced concerns over some issues that may hamper the export growth trend. The issues include GST, Caution Listing of Exporters, Currency Appreciation and Protectionism.
Commenting on the GST impact Mr Gupta maintained that the export sector welcomes the introduction of GST as its spin off effect would benefit both the manufacturing and export sector. The logistics cost is expected to come down to help the exim sector. The quick refund, as against delayed refund of VAT, will also help the export sector. However, Indian exporters are worried with the liquidity issue as the refund mechanism would require payment of GST first and its refund subsequently. “The additional cost of credit to manage the liquidity should be borne by the Government, if present exemption is not brought forward in the GST. On a rough estimate, export sector would be losing export competitiveness by about 2% and the same needs to be off-setted to the export sector,” the FIEO President urged.
He also highlighted that while the final Refund Rules envisaging issuance of acknowledgement within three days of the filing of claim and issuance of 90% of the claim amount on provisional basis within 7 days, ground reality is that the interest on delayed payment would be due only after 60 days. “This will give a jolt to exporters particularly in micro & small sector. We, therefore, request the Government to provide interest on delayed refund after 10 days (3 days + 7 days) instead of 60 days,” Mr Gupta added.
Elaborating on the issue pertaining to Caution Listing of Exporters Mr Gupta maintained that a large number of exporters have been put into the caution list by the Reserve Bank of India due to delay in reporting of export remittances. “The part of the problem lies with the exporters but banks are equally responsible as in many cases, they have not reported the cases of realization under the EDPMS,” he pointed out. He complimented Commerce Ministry for agreeing to the view of FIEO in extending the operation of caution listing of exporters from 20th of May to 30th of June, 2017. FIEO also requests the Government to provide waiver if the outstanding amount is up to 5% of preceding year’s export turnover as few transactions of export may remain outstanding for various reasons.
In Mr Gupta’s opinion, global challenges will continue unabated in 2017. While the global trade is expected to grow at 2.4% in 2017, but extreme volatility is expected in currencies. While Rupee has gained a bit in last few days, FIEO feels that Rupee will appreciate further in near future. “Unfortunately, exporters are expected to face bigger challenge since currencies of many competing countries is expected to depreciate further. FIEO, therefore, request that Government should look into the matter and provide some support to export sector based on the net foreign exchange criteria so that those sectors having large imports are provided less support while sectors having little or no imports are given higher support,” he suggested.