NEW DELHI: The Federation of Indian Export Organisations (FIEO) has sought support from the government to execute new orders amid exporters facing liquidity challenges due to the stoppage of export benefits of over Rs 10,000 crore under a key scheme along with refunds of the integrated goods and services tax (IGST).
The Merchandise Export from India Scheme (MEIS) would be wound up by December 31, 2020 and the government has already capped the benefits under it to Rs 2 crore per exporter from September 1-December 31, 2020.
“Exporters, particularly from MSME sector, are facing huge liquidity challenges due to the stoppage of MEIS benefits of over Rs 10,000 crore from April1, 2020 and IGST refund now,” said FIEO President S K Saraf.
The pitch for easing the liquidity constraints comes amid exporters receiving enquiries and new orders from new buyers and destinations that would help many sectors to show improved export performance. India’s exports shrank for the fifth month in a row in July when they contracted 10.2% on year at $23.64 billion.
“Unfortunately, many of the exporters have expressed their inability to honour such orders, in view of liquidity challenges, due to stoppage of exports benefits and refund of GST,” Saraf said.
Urging the government to look into the issue, Saraf said any let-up in export efforts will cost exporters “dearly”.
He also said that banks are helping eligible exporters with the emergency credit line guarantee scheme but due to hold up of GST refund and MEIS, the exporters are forced to seek additional loans from banks and such additional requirement is now subject to very high interest rates.
“Banks need to consider this pragmatically and provide a competitive interest rate to the exports sector particularly as the deposit rates have come down substantially with the reduction in key interest rate. Government needs to pay interest on the delay in refunding GST to compensate the exporters,” he added, and suggested 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 established.
Source:-economictimes.indiatimes.com