Most exporters and their associations have expressed disappointment with the government’s fiscal and monetary measures to revive exports. But few have articulated specific workable measures that they want the government to take.
The recession in rich countries has led to fall in demand and there is little the government can do to revive it. But, it is also true that the transaction costs for Indian exporters continue to be very high due to corruption and the government is not willing to do much about it — something that the associations of exporters are too shy to point out. Instead they have talked of more financial benefits without giving much justification, except that they are in difficulty.
The government has restored DEPB rates that were cut in November with retrospective effect and also restored the duty drawback rates that were cut in August consequent to the depreciation in the rupee. The funds necessary to release blocked amounts under Technology Upgradation Fund, deemed exports refunds, Central Sales Tax Refund and Market Development Assistance have been made available. Export Credit interest rates have been lowered for labour intensive sectors and the period for availing the interest rate concession has been increased.
The first point is that excise rebate, refund of unutilised Cenvat Credit, duty drawback, duty remission etc. are schemes that seek to give back the duty already paid. These rebates/refunds must be automatic entailing minimum fuss.
The government must ensure that the Customs notifications and procedures give proper effect to the Foreign Trade Policy (FTP) provisions and commerce ministry announcements. The notification under EPCG scheme is an excellent example of the finance ministry stipulating conditions quite contrary to the FTP conditions. The commerce minister had said duty credits like DEPB can be utilised to pay duty under the EPCG scheme.
He had said all EDI ports will be treated as single port and that Advance Authorisation and EPCG scheme will be EDI-enabled through electronic message exchange doing away with the requirement of physical verification and registration at the Customs end. The finance ministry is yet to give effect to these promises.
The finance ministry is yet to update its manual of supplementary instructions issued in 2001. Some licencing authorities have started demanding unstipulated documents like mate receipt to admit discharge of export obligation. Under the EPCG scheme, demands for copies of shipping bills and bank certificates have surfaced for redemption although the official requirement is only to submit the Chartered Accountant Certificate. Many EPCG cases remain open for want of installation certificates.
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All these problems can be solved but a strong will must be there to reduce corruption. That is what the exporters must demand.