Not Enough Credit, Late GST Refunds a Concern for Exporters: Industry Tells Govt

The persistent decline in bank lending for exporters, delay in refund of input tax credit and the fear of a withdrawal of duty-free export benefits by the US under the so-called GSP regime dominated the discussion at a meeting of the Board of Trade on Friday. Concerns about exports to Iran and the payment mechanism for the Islamic republic following the US sanctions, and incentives for shipments to neighbouring nations, too, were deliberated upon in the meeting, chaired by commerce and industry minister Suresh Prabhu.

In a statement, the ministry said the issues were addressed by senior officials and will be taken up in the upcoming meeting of the Committee of Exports and the GST Council. Media reports have suggested that India could lose the so-called generalised system of preference (GSP) concession, under which it enjoys zero tariffs on $5.6 billion of exports to the US a year, in the strongest punitive action against New Delhi under US President Donald Trump.

The Federation of Indian Export Organisations (Fieo) president Ganesh Kumar Gupta said although the recently-announced interest equalisation benefit has helped MSME manufacturers and merchant exporters of specified products, the bigger concern is the flow of credit. “The recent data by RBI show a credit decline of over 50% which is bound affect the flow of exports adversely. The liquidity is further tightened by the GST regime (which provides for a refund mechanism), as the proposed e-wallet scheme is nowhere in sight,” Gupta said.

Gupta said the government should introduce a scheme for promoting branded exports, enhancing budget for organising trade fairs and improving infrastructure. Industry body CII stressed the need to address issues related to trade financing, incentives and logistics, to improve the competitiveness of exporters.

Export credit collapsed by 54.8% as of December 21 from a year before, while the overall priority sector lending rose 8.5% during the period, showed the RBI data.Addressing board members, commerce secretary Anup Wadhawan said exports have been growing on a consistent basis since 2016-17 for almost three years and are likely to reach a new peak this fiscal.