Home / Association / Rupee appreciation, post GST restrictions and high cost of credit may contain exports to 310 billion

Rupee appreciation, post GST restrictions and high cost of credit may contain exports to 310 billion

Reacting on the export data published for July 2017 by the Ministry of Commerce, Mr Ganesh Gupta, President, Federation of Indian Export Organisations (FIEO) maintained that lower order booking, the appreciation of Indian Rupee, increasing pressure on liquidity under GST may affect exports in the last quarter of 2017 bringing exports to about USD 310 Billion in the current fiscal. Mr Gupta also pointed out that the major concern of the exporters in the current GST regime is the liquidity crunch, which should be immediately addressed by providing across the board offsetting of high cost of credit and timely carry forward of taxes from pre-GST and expeditious refund. “Besides high cost of credit which has been blunting the competitive edge of our exports, restriction on inter-state job work from unregistered suppliers are also some of the other major issues which should be looked into by the government,” he urged.

FIEO-Post GST seminar-ChennaiThe exports figure for the month of July, 2017, showed positive growth.  Engineering goods, Petroleum, Organic & Inorganic chemicals, Marine exports, Plantations were some of the sectors, which contributed to the positive growth in exports during the month. However, added Mr Gupta, the growth during month was of concern as among major product category which includes Gems & Jewellery, Drugs & Pharmaceuticals, Carpets and RMG including textiles further declined as compared to June, 2017 though more than half of the sectors, 19 out of 30 major product groups, were in positive territory.

“The need of the hour is the sector-wise analysis which should be initiated soon to pin point factors responsible for decline in such sectors. While there was some relief on the import front as the growth in imports was little less compared to June 2017 yet the trade deficit ballooned from US$ 26 Billion in April-July 2016 to USD 51 Billion in the corresponding months in 2017,” Mr Gupta underscored.

Post GST Seminar in Chennai

Earlier at a post GST seminar held on July 25 in Chennai Gupta voiced concern of exporters on liquidity, excessive documentation process and delays due to lack of knowledge on the part of both exporters as well as tax officials.

According to Mr Gupta, liquidity problems arise as the process requires payment of GST first while procuring the inputs and get refund subsequently after some lag. This also leads to blockage of working capital. While exporting also exporters needs to pay IGST or take exemption under LUT/Bond which increases compliance costs. Exporters have demanded an exemption mechanism instead of first paying tax and then claiming refund.

FIEO sought help form Commerce and Industry Ministry, Government of India in sorting out some of the problems of exporters. The apex body of Indian exporters requested that entire refund mechanism for exporters should be brought into one window for reducing transaction time and cost. “We hope that the forthcoming review of Foreign Trade Policy will take into consideration all the issues and constrains faced by the exporters today. Now after initial hiccup, focus will be on returns and related documentation,” Mr Gupta said. He assured all support to the exporters for compliance related issues and said that FIEO has set up GST assistance cell in all its offices for helping exporters in this direction. He also said that competitiveness of Indian exporters will reduce by two per cent due to interest burden on them.

At this seminar Dr A Sakthivel, Regional Chairman, FIEO Southern Region said that there still needs to be clarity on a number of issues, export benefits being one of them. “FIEO is getting queries from hundreds of exporters per day on the impact of GST on their business, and have been trying to answer them as best as we can. The learning curve is going to be steep, at least for the next 3-4 months, hence next quarters will be difficult for exporters,” he shared. Dr Sakthivel complimented the CBEC for announcing relaxation in filing of returns and compliances for first two quarters.

Mr M Rafeeque Ahmed, Vice President, FIEO raised the problem in claiming ITC refund as the same requires filing of GSTR which for July will be done by 20th Sept and thus claims will be delayed by over three months. He also urged to provide composite Drawback rate on self declaration trusting the trade.

Dr Ajay Sahai, Director General & CEO, FIEO in his analysis on GST and International Trade said that GST will add to the competitiveness of exports particularly as logistics cost and time will come down after introduction of e-way bill. He assured that the problems of job work particularly regarding rates and interstate supply for job work are likely to be addressed shortly. Dr Sahai provided clarification on various issues during his presentation.

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