The Federation of Indian Export Organisations (FIEO) recently urged the government to start manufacturing containers as a medium-term strategy as the problems of abnormal hike in freight rate, unavailability of containers and frequent shutouts by shipping companies continue despite the government encouraging shipping companies to bring empty containers and offering free movement of such containers from gateway port to inland container depots and container freight stations.
While demand side should be taken care by the exporters, the government plays an important role in imparting competitiveness to exports particularly addressing the supply side issues.
The biggest challenge in international trade is uncertainty, which has increased with delayed announcements of schemes, rates and even backlog in rightful claims of exporters, FIEO claimed in a press release.
A large number of exporters of goods and services are still awaiting for their claims for 2019-20 and 2020-21 (up to December last year) both in respect of Merchandise Exports India Scheme (MEIS) and Services Exports India Scheme (SEIS).
Their liquidity has dried up completely. Many of them in micro and small sector are not in a position to take new orders due to rising uncertainty and lack of liquidity. Exporters are required to pay advance taxes on such receivables and thus they have been put under severe financial strain.
The Remission of Duties and Taxes on Export Products (RoDTEP) scheme was announced with effect from January 1, but no rates have been announced till now. Hence, exporters cannot finalise contracts. This has become more acute for sectors having razor thin margins where such benefits are important component of the profitability.
Certain provisions brought through the Finance Bill in the budget have serious bearing on exports, FIEO said. Confiscation of goods under wrongful claim of refund/remission is particularly harsh as such confiscation will not only hurt exporters but will also affect the country’s exports and image.
The word ‘wrongful claim’ is subject to various interpretations and will put exporters at the mercy of field formations even if the remission rates are wrongly calculated or dispute about classification of the product under a particular rate arises. The remission rates may be 2 per cent of the product value, and for such a small benefit, the entire goods should not be confiscated, FIEO argued.
FIEO request the government to immediately introduce the e-Wallet scheme, recommended by the Goods and Services Tax (GST) Council in October 2017 and was supposed to be introduced with effect from April 1, 2018, and then deferred to October 2018.
It also urged the government to introduce a duty-free scheme for import of research and development (R&D) equipment and consumables by exporters with a minimum export turnover to encourage them to invest more in R&D.
