"We have also shared the details of the presentation with 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 per cent and an increase of share by 0.5 per cent can add to over $80 billion in country’s exports," said Gupta during a media briefing.
The FIEO president also shared concerns regarding some important issues. He said 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, we 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 per cent and the same needs to be off-setted to the export sector," said Gupta.
"While we welcome the final Refund Rules envisaging issuance of acknowledgement within 3 days of the filing of claim and issuance of 90 per cent of the claim amount on provisional basis within 7 days, unfortunately contrary to general belief, the interest on delayed payment would be due only after 60 days. This will give a jolt to exporters particularly in micro and small sector. FIEO, therefore, request the government to provide interest on delayed refund after 10 days (3 days + 7 days) instead of 60 days," added Gupta.
The review of Foreign Trade Policy 2015-20 is due on October 1, 2017. Since GST will be rolled out from July 1, 2017, FIEO has requested the ministry of commerce to prepone the announcement so as to coincide with the rolling out of GST.
The Mid-Term Policy Review should look at the performance of the new instruments introduced in the Foreign Trade Policy 2015-20 and also the modifications which are required in the wake of introduction of GST. We also request the Government to sensitize the trade & industry that the imports duty benefit on imports under the existing instruments would only continue till the date of introduction of GST, said the FIEO president.
Global challenges will continue unabated in 2017. While the global trade is expected to grow at 2.4 per cent in 2017, extreme volatility is expected in currencies. While Rupee has gained a bit in last 2-3 days, FIEO feels that Rupee will appreciate in near future. Unfortunately, exporters are expected to face bigger challenge since currencies of many competing countries is expected to depreciate further.
FIEO acknowledge the positive role played by Rupee appreciation in Indian economy particularly, as it helps in containing import led inflation. However, it does affect competitiveness of Indian exports. The impact of Rupee appreciation varies from sector to sector. Traditional sectors of exports like handicrafts, carpets, handlooms, textiles, leather, etc. face huge competitiveness issue on account of such appreciation.
"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," stated Gupta. (KD)
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