RUPEE FALL BRINGS RELIEF TO EXPORTERS

Exporters

Come September was an woe in the minds of Exporters for the reason that

  • Input Costs were huge
  • There existed a total uncertainty in the Tariffs of various items
  • Issues related to delay in IGST refunds

Issues before the Exporters:

  • The above issues contributed for a reduction in Exports for the first time during the period of last six months.
  • The exporters though are happy on one side with the depreciation in the value of Indian Rupee, the aforesaid issues has brought a soar in the Exporters’ face.
  • On a high base exports reduced by 2.34 percent in September, inspite of the rupee fall
  • During August this year, when the rupee value was 70.8 per dollar, India’s average export growth stood at 8.5%. However, the export growth during the same period last year was 16.8% when the rupee value was Rs. 64.2 per dollar.
  • The Federation of Indian Export Organizations says that though there is depreciation in rupee value, this benefit is not passed on to the exporters.
  • FIEO also informs that the fall in rupee value has also contributed for an increase in the import cost of capital goods, inputs and other services used by exporters which otherwise they should pay in foreign currency.

Concerns:

  • It is learnt that biggest export destinations like West Asia, Africa and certain parts of Asia have now started asking for discounts due to the depreciation in the rupee value.
  • Further, it is felt that decisive Government policies also is a factor for the present financial troubles.
  • Many export orders are now diverted to other countries like Srilanka, Bangladesh, and Vietnam.
  • There is no clarity as to whether Indian exports would get GSP benefits or not. GSP is a system wherein US allows certain eligible countries to export around 3500 commodities to the US on a duty-free basis.
  • Though India is claiming to be eligible for GSP benefits, exporters say that they have not received any official communication to this extent.
  • Another point is refund is IGST refunds. Government is stubborn in this issue.  Government adds that since exporters are receiving duty drawbacks, on input taxes paid they are not eligible for any refund.
  • Also, an exporter who operates in one state is eligible for Central GST and State GST refunds, whereas an exporter operating across states, gets no IGST refund. It is claimed that over 50% exporters’working capital is locked up in IGST refunds.

 

Author: Admin Bankedge

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