At the most, we may touch US$ 145 billion: FIEO President
FIEO organized a press conference on 16th February at Kolkata to share with the media the concerns of exporting community over rupee appreciation, non-refund of VAT and other issues.
Addressing mediapersons, FIEO President Mr. Ganesh Kumar Gupta said: "Export performance during the last nine months from April to December 2007 recording a growth of 11.8% in dollar terms and 21.76% in rupee terms mainly reflects the growth in sectors like petroleum, gem & jewellery and engineering. Petroleum prices have risen from US $ 50-52 per barrel to US$ 90, gold prices have gone up from US$ 300 per oz to US 900 per oz and the steel prices have also gone up. However, on the flipside, textiles have shown a negative growth of 8%, handicrafts exports have declined by 60%, whereas pharma and leather sectors have shown little positive growth. Prices of raw material have also gone up to a large extent. Various other factors have also contributed to this decline. In the neighbouring countries like Pakistan, Bangladesh and Sri Lanka, the rupee has been depreciating. This has contributed to cheaper prices of various products which had affected the exports from India. Rupee appreciaition also affects the balance sheet of those companies which use domestic input to manufacture export products. One of the main reasons is the recession in US economy. US is now proposing a 0.50% cut in interest rates. This necessitates RBI to announce rate cut in lending rates for export finance."
Explaining the appreciation of Indian rupee against the US dollar, Mr. Gupta said from March 2007 till date the Indian rupee has appreciated by 15% against the US dollar which is affecting the export growth. He further said that appreciating value of rupee was not only bringing down exports in volume terms but also hampering industrial growth due to excessive imports from other countries. Since imports have become cheaper, this has affected the downstream industry and has in turn hit the growth of small and medium enterprises. Given the existing scenario, said Mr. Gupta, perhaps the target of US $160 billion set by the Ministry of Commerce and Industry may not be achieved and at the most we may touch US$ 145 billion. Mr. Gupta suggested that the Government of India, as a remedial measure, should ensure speedy refund of all central/state levies and taxes paid by the exporters immediately. "It will be a welcome move if agreed to by the Government," he said.
Referring to high transaction cost of exports ranging between 8 to 15%, FIEO Chief said exporters should get compensation to the extent of at least 5% from the Government. He further pointed out that manufacturing growth had declined from 12.2% to 9.6% and industrial growth had declined from 11.2% to 9%, which, he said, is a matter of great concern.
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Mr. Ganesh Kumar Gupta, President, FIEO(3rd from right) addressing the press. On his right are Mr. P K Shah, Past President, FIEO; Mr.S K Jain, Chairman, FIEO(ER) and Mr. Sushil Kumar Patwari, Managing Committee Member of FIEO. On Mr. Gupta’s left Mr. Ajay Sahai, Director General, FIEO; and Mr. Pravin Saraf, Managing Committee Member of FIEO. |
In order to restore the competitiveness of Indian Exports, Mr. Gupta felt that export finance should be made available at bank rates and an "Exchange Neutralisation Fund" should be set up to help the exporters. He suggested that the country should emulate China with respect to advance announcements of the currency value against the US dollar so that the exporters could plan their activities in a better way.
Acquainting the mediapersons with the problems faced by Eastern region exporters, Mr. S. K. Jain, Chairman, FIEO (ER) said that the most important burning issue was non-refund of VAT by the West Bengal and Orissa governments from ever since its implementation in 2005-06 despite several reminders. According to him, VAT refund worth Rs. 300 crore was due to exporters, mostly from engineering and leather sectors. Referring to sales tax assessment, Mr. Jain said it should be completed within two years, else the same should be time barred.
Explaining problems affecting the export of tea, jute and other agro products, Mr. Jain said exporters are citing a price of tea at US$ 150 per tonne for the same tea that was quoted last year at US $200. Referring to jute industry, he said, the announcement of duty free imports of jute and jute goods from Bangladesh, has sent jitters to the domestic jute industry in West Bengal which is facing bleak export prospects. Responding to a query by a reporter, Mr. Jain said nearly 5 lakh people are going to be unemployed in the coming few months in West Bengal due to poor export performance.
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Raising another issue, Mr. Jain said exporters have to pay marketing committee cess on agricultural transactions and sales tax when the goods are brought into West Bengal, thus making the goods virtually non-exportable. "Slowly, the businesses are closing down in West Bengal and moving to neighbouring states. The state government needs to take proactive steps even to maintain the its level of exports to Bangladesh which is to the tune of Rs. 11000 crore." Added Mr. Jain. |
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A view of the press people along with member exporters |
FIEO Managing Committee Member Mr. Pravin Saraf apprised the mediapersons of rampant incidents of non-remittance of export proceeds from banks in Bangladesh. He said payments to the tune of nearly Rs. 100 crore were pending with banks in Bangaldesh since the last two years and small and medium enterprise sector were suffering the most as they were facing capital crunch. To this, FIEO President added that due to non-payment from banks in Bangladesh, the accumulated interest cost was also vey high.
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FIEO Chief seeks more services under tax refund net In a press statement issued by FIEO on 20th February, President Mr. Ganesh Kumar Gupta has thanked the Finance Ministry for extending the service tax refund facility to more services. Services provided by GTAs and those provided in containers by rail for transportation of export goods from the actual place of removal to actual place of exports as well as courier services have been brought under refund net by the Ministry. FIEO Chief has, however, demanded that a major chunk of other services utilized by exporters such as foreign sales commission, commission on export sales to buying offices abroad, services rendered by Custom House Agents (CHAs) to the export sector should also be made eligible for service tax refund. Besides this, Mr. Gupta has urged that exemption on business exhibition services should be extended to the members of FIEO. At present, the exemption is only available to members of Export Promotion Councils and Commodity Boards dealing with textile products. Meanwhile, FIEO Chief has expressed hope that a more comprehensive package would be announced soon to offset the continuing rupee appreciation and inherently high transaction costs. |
