FIEO's suggestion at the "Council for Trade Development and Promotion meeting"
January 8, 2018
Suggestions put forward by FIEO President, Mr Ganesh kumar Gupta during the 3rd meeting of the ‘Council for Trade Development and Promotion at New Delhi on January 8, 2018
Indian exporters are facing tough competition globally, particularly MSMEs who have limited resources. States have indeed an important role to play in India’s exports as all factors of production lies with the State. Hence, I would like to flag a couple of points where support of State would immensely benefit the exporting segment in terms of enhancing the ease of doing business and reducing transaction cost as well as time.
1. Exporters are now required to pay taxes and subsequently claim refund under GST. The States, in this regard, have a larger role to play as they shall be handling large number of refund applications manually, till online mechanism starts functioning. Hence, awareness amongst the concerned officers at ground is extremely important for smooth processing of such refund applications.
Moreover, a refund mechanism, how so ever efficient, affect the liquidity and competitiveness of exports and thus we request you all to provide exemption from GST on inputs required for export production as is being provided by many countries where GST or VAT is in operation.
2. Secondly, electricity duty being levied by some States are presently not refundable and thus has to be absorbed in the export price. This has bearing on the export competitiveness to some extent. Hence, export industry would require support from State Government to push for electricity duty under the GST regime. We expect that Petroleum goods will also be brought under GST in next fiscal.
3. Exports are price sensitive and most of exports are being done on a razor thin margins. However, land locked exporters have to bear huge transportation charges which is being absorbed in export pricing. They thus lose out to their competitors. Hence, States may consider providing transport/freight subsidy enabling exporters from hinterland to compete with their counterparts in coastal states as well as other countries.
4. Sir, lack of facilities like testing, designing etc. at local level for a particular export product does add to transaction cost and time. Here, I would submit that States may identify projects after examining the infrastructure needs of particular exporting centers and accordingly provide support under TIES.
5. Last mile connectivity is need of the hour for smooth movement of export cargo. Hence, States may review its connectivity to ports, dry ports and LCS and identify sectors which require attention.
6. Services and agri sector could be the major growth drivers for export promotion as well as employment. Conducive polices, hard infrastructure as well as skill are crucial areas where the Government can focus upon while drawing action plan.
7. There is a need to enhance the visibility of Indian products abroad. States, in line with the marketing support under Central Government schemes, may introduce similar schemes for sectors having export potential.
8. Each State must have empowered Export Facilitation Committee (EFC) chaired by the State Commerce/ Industry Minister. This committee should include Industry, Revenue, Energy and Labour Secretaries and few l exporters. This committee must meet once a month to sort out all the issues affecting export and industrial growth. At present, some States have Udyog Mitra, Grievance Committee, etc but all these committees do not have any teeth and are not effective. EFC should have legislative backing so that its decisions are followed in letter and spirit.
9. Lastly, an actionable and dynamic export strategy for States is important and FIEO assures full support to States in its endeavour of developing suitable strategies. Further, export officers at district level could be the key enablers in process of framing strategies as they have direct interface with local industry. There is need to sensitise State offices in various facets of international trade.
I am sure the initiative taken under the Chairpersonship of Hon’ble Commerce & Industry Minister would go a long way in brining the desired focus towards export sector and taking Indian exports to a higher growth trajectory.