‘Levy of GST on export freight will affect MSME segment’

Xerxes Master, President, Association Of Multimodal Transport Operators of India (AMTOI) said, “We at AMTOI categorically and unambiguously, disapprove this move to levy GST on Export Freight and will make the required representation to the government against it. We are hopeful that wisdom will prevail and the government which we believe is respective to the voice of the trade, will reconsider this decision and exempt this levy which hurts the EXIM trade as well.” He added, “The exporters who are already struggling with inflated Ocean and Air Freight triggered by the pandemic will now have to provision for additional working capital on account of GST which has to be deposited with the Government. The cost of money in India is between 8-12%, whereas in the most developed world which imports from India it is between 1-5%. This additional capital is likely to be blocked anywhere between 60-90 days. Logistics costs for export freight will go up anywhere between 1-2% points. The Exporters are likely to avoid this undue cost, by changing the incoterms from CIF to FOB, leaving the freight decision to the overseas buyer. This move will most certainly eliminate the Freight Forwarding community majority of who are small entrepreneurs belonging to MSME segment. In absence of these forwarders, there will be no competition in the market, and larger players, particularly multinationals are likely to exploit this lack of competition, resulting in a higher cost to the Indian Exporter.”