Briefing to Media by Shri G K Gupta, Newly Elected President, FIEO

Indian exports are on upward trend in last few months. We have ended up with export of USD 275 billion in last fiscal and are on our course to achieve a new milestone of USD 325 billion in 2017-18.

Additional support may be given to products figuring in top 200 products of global imports at 6 digit level. Our share in these 200 products is presently at 1.43% and an increase of share by 0.5% can add to over USD 80 billion in country’s exports.

1. GST Benefits: The export sector welcomes the introduction of GST as its spin off effect would benefit both the manufacturing and export sector. The logistics cost is expected to come down to help the exim sector. The quick refund, as against delayed refund of VAT, will also help the export sector. On a rough estimate, export sector would be losing export competitiveness by about 2% and the same needs to be off-settled to the export sector.

While we welcome the final Refund Rules envisaging issuance of acknowledgement within 3 days of the filing of claim and issuance of 90% of the claim amount on provisional basis within 7 days, unfortunately contrary to general belief, the interest on delayed payment would be due only after 60 days. This will give a jolt to exporters particularly in micro & small sector. FIEO, therefore, request the Government to provide interest on delayed refund after 10 days (3 days+ 7 days) instead of 60 days.

2. Caution Listing of Exporters – Banks Delay in EPDMS Reporting: A large number of exporters have been put into the caution list by the Reserve Bank of India due to delay in reporting of export remittances. The part of the problem lies with the exporters but banks are equally responsible as in many cases, they have not reported the cases of realization under the EDPMS. We compliment Commerce Ministry for agreeing to the view of FIEO in extending the operation of caution listing of exporters from 20th of May to 30th of June, 2017.

3. Currency Appreciation: Global challenges will continue unabated in 2017. While the global trade is expected to grow at 2.4% in 2017, but extreme volatility is expected in currencies. Many of my exporter friends have highlighted their concern due to appreciating Rupee. FIEO feels that Rupee will appreciate in near future. Unfortunately, exporters are expected to face bigger challenge since currencies of many competing countries is expected to depreciate further. We have already seen how the appreciation of Chinese Yuan by over 10% in last 18 months have impacted India’s exports as Rupee has depreciated marginally during the same period. There is continuous flight of capital from many emerging economies to US. However, FII and FDI inflows in the country are on the up.

FIEO acknowledge the positive role played by Rupee appreciation in Indian economy particularly, as it helps in containing import led inflation. However, it does affect competitiveness of Indian exports. The impact of Rupee appreciation varies from sector to sector. Some of the sectors with high import intensity like Gems & Jewellery, Petroleum products, certain Electronic goods do not suffer much on account of such appreciation but traditional sectors of exports like Handicrafts, Carpets, Handlooms, Textiles, Leather, Agro-products, Marine goods, etc. face huge competitiveness issue on account of such appreciation.

FIEO, therefore, request that Government should look into the matter and provide some support to export sector based on the net foreign exchange criteria so that those sectors having large imports are provided less support while sectors having little or no imports are given higher support.

4. Protectionism: The globalization is under challenge. Countries are becoming inward looking particularly the advanced economies. Hitherto Indian exports have not been impacted except to some extent, in respect of, on-site IT consultancy services. However, the growing protectionism may impact many of our export destinations as they will have lesser appetite for imports. Protectionism has also resulted in uncertainties. Even the economies which are doing well, where job market is at a high and unemployment rate at the lowest level, imports are not increasing as consumer spending is going down. Such a trend will affect India’s exports of life style products and so called luxury goods.

5. Mid-Term Review of the Foreign Trade Policy Release on 1 October: The review of Foreign Trade Policy 2015-20 is due on 1st October, 2017. Since GST will be rolled out from 1st of July, 2017, FIEO has requested the Ministry of Commerce to prepone the announcement so as to coincide with the rolling out of GST. We are grateful to the Hon’ble Minister for agreeing to our request. The Mid-Term Policy Review should look at the performance of the new instruments introduced in the Foreign Trade Policy 2015-20 and also the modifications which are required in the wake of introduction of GST. All the policy instruments– both providing duty neutralization and export promotion would undergo major modifications in the GST. We also request the Government to sensitize the trade & industry that the imports duty benefit on imports under the existing instruments would only continue till the date of introduction of GST. All existing instruments will have to follow the discipline of the GST Act and the Rules from 1.7.2017. The Mid Term Review should also focus on new Scheme to promote exports under “Brands” and “Sales to Foreign Tourists”. Simplification, transparency and EDI should be the hallmark of the procedural changes to be notified after the review so that the changes are in line with our commitment towards trade facilitation.

(This Correspondent asked FIEO President on Modernization and Revision of Input Output Norms. The response was that FIEO has asked DGFT to release AA based on past consumption records without going through Norms fianlisation).