As much as Rs 22,000 crore GST refund is pending with the government, creating liquidity problem for exporters and impacting overseas shipments, FIEO said Wednesday.
Federation of Indian Export Organisations (FIEO) President Ganesh Gupta said the delay in refund is mainly impacting small exporters who provide jobs in labour-intensive sectors.
“Refunds of about Rs 7,000 crore are pending on account of IGST (integrated GST) and about Rs 15,000 crore ITC (input tax credit) as of September 30. This is impacting small exporters,” Gupta told reporters here.
He said that liquidity is a major area of concern particularly for MSME exporters who constitute the bulk of exports in employment-intensive sectors.
While refund process has improved in the last six months, the refund can be claimed only after manufacturing of goods and exports with a lead time of about three-nine months depending on the production cycle, he added.
He demanded that exemption from GST should be provided on inputs required for export production to provide necessary competitiveness to exports.
“At present, ITC refund is partly electronic and partly manual. The exporter files refund application at the portal, takes a printout along with acknowledgement and carries it to GST authorities in hard copy along with required documents which too varies from authority to authority,” Gupta said.
Talking about credit woes, he said the cost of exports has increased by about 5-6 per cent and the big exporters are now using letters of credit (LCs) in place of letters of undertaking.
“The immediate concern of the export sector is with regard to flow of credit from the banking sector. Even getting renewal of limits is taking abnormal time with huge documentation requirement. The export credit declined by 26.4 per cent in the financial year ending March 2018,” he said.
Technically, export credit is under the priority sector lending but through a complex mechanism, he said, adding the cost of credit is also an issue as interest rates are moving northward.
On rupee, Gupta said the limited intervention by the RBI has not been able to contain the volatility as it is a global phenomenon.
The rising crude prices, northward movement of Fed rates in US, pullout by FIIs and increasing current account deficit which is expected to touch 3 per cent of GDP as estimated by the IMF are bound to put pressure on the rupee, he said.
“Contrary to general perception, such depreciation has not benefited exports to the extent anticipated,” he said.
Further, he said the federation has suggested a barter system trade with Iran.
He has suggested setting off/adjustment of export receivable against import payable from the same entity in Iran.
“Though the RBI guidelines allow such transactions, which are also recognised in the Foreign Trade Policy, but banks are not clear whether this facility is applicable for exports/imports to/from Iran,” he said.
Source- Business Standard.