Exporters panic as RBI waves ED threat

Exporters panic as RBI waves ED threat

Exporters across the country are feeling intimidated after the Reserve Bank of India (RBI) threatened to report them to Enforcement Directorate (ED) over non-realisation of export proceeds – that is expected to impact roughly 90,000 exporters across the country.

Industry-body Engineering Export Promotion Council of India (EEPC) has trained the guns over the bank on this issue.

While the EEPC India has been regularly advising its members to reconcile their remittances records, several banks are not issuing the clearances, especially with regard to shipments to countries like Syria, Iran, and Sudan, Chairman of EEPC Ravi Sehgal said.

“We have received several complaints from our members about the banks not issuing documents about the remittance receipts even after submission of all the required papers. Thus, exporters are facing a double whammy -- losing refunds like drawbacks and the possibility of ED action,” Sehgal said.

In a bid to crack down on hedging against the rupee, which has been on a slide in 2019, the central bank has warned exporters that they could be reported to the Enforcement Directorate (ED) if they fail to record their export proceeds with the banks.

According to estimates, over 90,000 exporters, comprising a sizeable segment of the community, are at risk from this new rule.

The central bank, according to the sources in the know, has got the data to carry out its threat on the basis of software it had introduced in 2014 -- Export Data Processing and Monitoring System (EDPMS), which is used by banks in their business with exporters.

Sehgal said, at a time when exports are facing global headwinds like the slowdown in the US economy, the uncertainty of Brexit and the trade war between the US and China, the RBI and the government should be dealing with issues like remittances in a friendly manner.

He said India’s overall merchandise exports remained static, logging in less than 1% growth in November this year. “The last thing our exporters want is the procedural hassle and any enforcement action,” the EEPC India Chairman said.

In fact, according to the data available with the government, the engineering exports have declined by 7.34% in the month of November.

US has historically been the top destination for engineering commodities exported from India, followed by UAE and China, the data available with the Department of Commerce suggests.