'Availability of credit is a biggest challenge'

Ganesh Kumar Gupta, President, FIEO

As India’s exports continue to lag, making the govt look for new markets and products to perk it up, Ganesh Kumar Gupta, President, Federation of Indian Export Organisations (FIEO) explains the reasons to Annapurna Singh of DH. Excerpts:

 

Are GST refund issues still haunting exporters? What are your expectations from the government?

The problem of IGST refund is more or less solved except for cases which are stuck up with GSTN. The bigger challenge lies in ITC refund as the same is not completely electronic. The manual system of taking a physical copy of application along with a host of documents to tax authorities add to the transaction time and cost. The fact that over 40% of the applications have not yet been submitted manually shows that the small exporters are facing the brunt. We expect the Government to bring ITC refund on a complete electronic module as has been done for IGST refund.

 

Exports, in general, are lagging behind. What are the problem areas that need to be addressed on a priority basis?

The biggest challenge faced by the export sector is the availability of credit. The RBI data shows a sharp decline in credit by over 50% in August 2018 as compared to the corresponding period in 2017. The lack of support for marketing is another challenge, particularly for the MSME sector. The government should create an Export Development Fund with a corpus of 0.5% of previous year exports to provide for showcasing of Indian products/services abroad.

 

Which sectors demand special treatment?

Generally speaking, the labour intensive sectors require special treatment as growth in such sectors helps in the creation of additional jobs. Apparel, Textiles, Handicrafts, Carpets, Agro & Processed Food, Marine Products, Sports Goods, Footwear & Leather, Gems & Jewellery are some of the sectors which may be considered for such treatment.

 

Is the current liquidity problem with banks also affecting exports?

Technically speaking, exports are under Priority Sector Lending, yet down by over 50%. We, therefore, request the government to keep exports under 40% lending norms so that flow of credit to the export sector may be augmented. Moreover, banks are taking enormous time and asking for voluminous documents even for renewal of limit. Banks should grant limit within a reasonable time frame of 30 days and should not raise objections in a piecemeal manner so as to delay the process.

 

Union Cabinet is expected to take up agriculture export policy this week. What is your suggestion for that?

We want an Agri Export Policy which should provide a stable framework for Agri exports as against switch on and switch off policy in the past. India should be considered as a reliable supplier for Agri products and for that to happen we should have detailed account of our buffer stock, scientific forecasting of crop and demand so that we keep surplus for exports.

In case, we do not have a surplus, we should import rather than restrict exports as market once lost is very difficult to gain since importing country would not treat you as a reliable supplier. Agri exports should be given freight subsidy so that hinterland exporters who incur huge inland freight are compensated. The government is providing high MEIS support to many agri commodities which should continue and the benefit may also be given for seeds exports as seed cultivation has become commercial and it creates huge employment in villages.

 

Are exporters facing problems in trading with Iran? What is the way out?

There is a lack of clarity on exports to Iran. However, we hope that since India has been granted a waiver on imports of oil from Iran, we soon will have detailed guidelines on exports to Iran. We have been given to understand that the work is in progress on the reintroduction of Rupee Payment Mechanism so that the payment for the oil may be used for paying the Indian exporters in respect of supplies made to Iran.

 

The government has stopped giving yearly merchandise export targets. Any estimate on India’s exports at the end of this fiscal?

We expect Indian merchandise exports to reach close to $350 billion in this fiscal. The services exports should grow to $210-220 billion. Therefore, an overall export of $550 bilbillion-plus should be achieved during the current financial year.

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'Availability of credit is a biggest challenge'

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