‘No extension in GST exemption can affect agri, perishable trade’

Requesting the finance minister, Nirmala Sitharaman to further extend the GST exemption notification, Dr. A Sakthivel, President, Federation of Indian Export Organizations (FIEO) said, “The payment of GST on such high freight rates will affect the liquidity of the exporters to a large extent particularly as the interest rates have also increased with the recent hike by the Reserve Bank of India (RBI). The payment of GST on export freight and subsequent refund particularly through ITC mechanism comes with a time lag of 2-3 months or so, though refund through IGST mechanism is faster. Such a move will affect our agriculture exports the most as in many cases of export of fruits and vegetables, the air freight, at times, is much higher than the freight on board (FOB) value of exports. Therefore, exporters would be required to pay a very high GST amount on such freight adversely impacting the cash flow. I request the finance minister to extend the exemption for a further period to free the exporters from the hassle of securing additional funding. This may augment the liquidity of the Government but at the cost of the exporters. Since the cost of credit for the exporters is much high, an exemption will help the export sector to have better liquidity, which is the need of the hour. An early decision will be very much appreciated by the exporting community which is passing through a difficult phase and is likely to become further difficult in months to come.”