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Indian MSME exporters facing huge funds crunch: FIEO
16 Sep '20
2 min read
Pic: Shutterstock
Indian exporters, particularly from micro, small and medium enterprises (MSMEs), are facing huge funds crunch due to the stoppage of Merchandise Exports from India Scheme (MEIS) benefits of over ₹10,000 crore from April 1 this year and refund of integrated goods and services tax (IGST) now, , according to Federation of Indian Export Organisations (FIEO) president S K Saraf.
When exporters are receiving new orders now from new buyers and destinations, they need support to help them to execute such orders. But unfortunately, many of them have expressed their inability to honour such orders, Saraf said in a press release.
Indian exporters have started receiving a lot of enquiries and orders from across the globe despite the pandemic, helping many sectors to show improved export performance, Saraf said, and this is likely to get better in the next few months.
He urged all wings of the government to sit together and resolve the technical and financial issues and allow the seamless flow of liquidity to the export sector.
As GST refunds and MEIS are held up, exporters are forced to seek additional loans from banks and such additional requirement is now subject to very high interest rates, he highlighted. Banks need to consider this pragmatically and provide a competitive interest rate to the exports sector as the deposit rates have come down substantially with the reduction in key interest rate, he added.
FIEO also urged the government to address the issue of risky exporters by providing them duty drawback and IGST benefits against a bond, if physical verification of such exporters has been done.
When exporters are receiving new orders now from new buyers and destinations, they need support to help them to execute such orders. But unfortunately, many of them have expressed their inability to honour such orders, Saraf said in a press release.
Indian exporters have started receiving a lot of enquiries and orders from across the globe despite the pandemic, helping many sectors to show improved export performance, Saraf said, and this is likely to get better in the next few months.
He urged all wings of the government to sit together and resolve the technical and financial issues and allow the seamless flow of liquidity to the export sector.
As GST refunds and MEIS are held up, exporters are forced to seek additional loans from banks and such additional requirement is now subject to very high interest rates, he highlighted. Banks need to consider this pragmatically and provide a competitive interest rate to the exports sector as the deposit rates have come down substantially with the reduction in key interest rate, he added.
FIEO also urged the government to address the issue of risky exporters by providing them duty drawback and IGST benefits against a bond, if physical verification of such exporters has been done.
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