Indian exporters have urged the government to restore the Goods and Services Tax (GST) exemption on export freight and extend the rupee payment mechanism to more countries amid World Trade Organization (WTO) hint at a sharp decline in global trade.
The Federation of Indian Export Organizations (FIEO) stated during a meeting with commerce minister Mr Piyush Goyal that:
- Exporters shall pay GST on export ocean freight with the removal of the exemption from 1st October 2022.
- This situation caused uncertainty and added liquidity challenges.
- Overseas freight is still 200-250% more than the pre-COVID levels.
- GST on export freight is revenue-neutral, as exporters can claim a refund after making the payment. It may increase liquidity for the government, but at the cost of the exporters.
- An exemption will help the export sector to have better liquidity amid the very high cost of credit for exporters.
- An increase in repo rate has a bearing on the base rate of banks and, consequently, on the lending rates for export credit.
- Also, it requested to introduce an export refinance facility because interest rates in many competing countries are much lower.
The ministry stated that the industry to be attentive and optimistic considering the evolving economic and geo-political environment so that growth opportunities in new markets are not ignored. Also, it assured industry participants that the government is committed to addressing their issues.
Also, Minister Goyal urged the industry to increase quality standards, implement innovative ways of marketing, and utilise free trade agreements to achieve higher export growth.
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DVSR Anjaneyulu known as AJ, is a Chartered Accountant by profession. Loves to listening to music & spending time with family and friends.