Roadblocks such as delay in GST refunds and after effects of note ban hit India's export prospects in 2017-18 amid a revival in global demand mainly in key markets of the US and the EU, a report by PHD Chamber said.
India's exports grew by just 10% to $302.8 billion against expectations of $325 billion in the last fiscal.
A moderate export growth of 10% last financial year also led to a 45% jump in trade deficit at $157 billion in 2017-18 against $108 billion, the report said.
While releasing the study on 'Impact of GST on Business, Industry and Exporters', PHD Chamber President Anil Khaitan said that various structural and domestic factors such as after-effects of demonetisation and teething problems of GST have significantly impacted the potential of exports growth.
Many of the exporters are still struggling for their IGST refunds and are out of exports business as their working capital has been squeezed. Crores of rupees have been stuck in the IGST refunds process, said Khaitan.
On the other hand, the trade deficit ballooned by 45% to $157 billion in 2017-18 compared with $108 billion in 2016-17 on the back of tremendous rise in imports vis-à-vis revival of domestic demand, said Khaitan.
He noted that the trade deficit at $157 billion is observed at the highest in the last five years.
The domestic import demand has increased significantly vis-à-vis larger increase in import volume by 20% during 2017-18. India’s imports grew by around 20% at $459.6 billion in 2017-18 from $384.3 billion in 2016-17.
He said that the labour intensive exports, where we hold significant competitiveness and opportunities for India, such as textiles, footwear, farm products, and gems and jewellery have been impacted significantly.
He said, "We are not able to capitalise the emerging global market opportunities due to roadblocks in the IGST refunds."
He was of the view that 2017-18 can be translated as a missed opportunity for India to touch an unprecedented growth in exports, as world economy showed remarkable signs of growth and major economies like the US, the EU, Japan showed rise in their import growth.
South Korea, Indonesia and Malaysia registered robust export growth during 2017. South Korea’s exports grew by 16%, Indonesia by 17% and Malaysia by 15% during 2017.
"Despite being the fastest moving emerging economy in the world, we are struggling to contribute to the global value chains across the world. Apart from the IGST refund issues, inadequate transport infrastructure facilities has adversely affected timely shipments and have hindered the true growth potential of Indian exports," he said.
There is an environment of despair in the exporters’ community and they are in the stressed mode because of losing their competitiveness to China, South Korea, Indonesia, and other countries, he added.
"If the problem of IGST refunds is resolved properly, we look forward to a 20% growth at $360 billion in 2018-19 on rising global demand and improving supply side scenario at domestic front," he said.
Merely announcing policy reforms would not boost the export environment, ground level assessment for the implementation of those reforms and continuous feedback looping is required, he added.