Elaborating the liquidity crunch being faced by exporters, S K Saraf, President, FIEO, says, “Despite the pandemic, Indian exporters have started receiving a lot of enquiries and orders from across the globe helping many sectors to show improved export performance, which is likely to get better in next few months. However, exporters, particularly from MSME sector, are facing huge liquidity challenges due to the stoppage of MEIS benefits of over Rs 10,000 crore from April 1, 2020 and IGST refund now. At this point of time when exporters are receiving new orders from new buyers and destinations, support needs to be given to help them to execute such orders.” Unfortunately, many of the exporters have expressed their inability to honour such orders, in view of liquidity challenges, due to stoppage of exports benefits and refund of GST.
President, FIEO urged the Government to look into the issue as any letup in our export efforts, at this juncture, will cost us dearly while successful execution of these orders will bring additional export business from new and unexplored territories. All wings of the government should sit together, opined Mr Saraf, to resolve the technical and financial issues, helping the seamless flow of liquidity to exports sector.
President, FIEO also said that banks are helping eligible exporters with the Emergency Credit Line Guarantee Scheme but due to hold up of GST refund and MEIS, the exporters are forced to seek additional loans from banks and such additional requirement is now subject to very high interest rates. Banks need to consider this pragmatically and provide a competitive interest rate to the exports sector particularly as the deposit rates have come down substantially with the reduction in key interest rate. Govt needs to pay interest on the delay in refunding GST to compensate the exporters.
FIEO also urged the Government to address the issue of Risky Exporters by providing them duty drawback and IGST benefits against a bond, if physical verification of such exporters has been established. The SOP issued for risky exporters may be meticulously followed so that after due verification, exporters are taken out from the category immediately.
Saraf exuded confidence that export performance is improving and with due support from all the stakeholders, we can bring exports back on track by the end of the year.