NEW DELHI: Exporters say meeting the export target of $900 billion by 2020 seems tough, given the current global economic scenario; a more realistic goal would be $700-750 billion.
The Federation of Indian Export Organisations (FIEO) has also expressed apprehensions that paying input taxes first and then claiming refunds under the Goods and Services Tax (GST) regime could lead to losses worth 2 per cent of export value, and has asked the Government to bear that burden.
“Reaching the target of $900 billion set in the Foreign Trade Policy would require exports to grow at a compound rate of 27 per cent (from the current fiscal to 2019-20). Given the current global scenario, the possible rate of growth might be 15 per cent, which would translate into exports of $700-750 billion by 2019-20,” said FIEO Director General Ajay Sahai.
The Commerce Ministry is expected to announce a review of the FTP 2015-2020 simultaneously with the implementation of GST from July 1 this year.
Exporters have expressed their reservations about the refund mechanism for input taxes under GST. “While we welcome the final refund rules on issuing acknowledgement within three days of filing refund claim and issuance of 90 per cent of claim amount within seven days, the interest on delayed payment would be due only after 60 days. This will give a jolt to exporters, particularly in the micro and small sector,” said FIEO President Ganesh Kumar Gupta, who is also an exporter of textile and silk items.
FIEO has made various suggestions to the Government to help exporters deal with the financial burden of delayed refunds.
One proposal is to allow e-currency, under which a certain percentage may be credited into an exporter’s account based on their previous year’s exports. That e-currency can be used to make payment for input taxes by debiting the amount.
When the refunds happen the e-payment debited from the account would be credited back. “When refunds happen, if it is observed that claims were more in certain cases than the payment due, then the difference can be paid for in cash by the exporter,” Sahai explained.
Another suggestion made by FIEO is that the losses that the sector is likely to suffer due to the possible delay in refunds of input taxes can be compensated by increasing the rates of incentives under the existing merchandise export incentive scheme (MEIS).
A third proposal by the export organisation is that the interest on delayed refunds of input taxes paid by exporters be due after 10 days of filing claim instead of 60 days, as it would affect the competitiveness of small and medium units.