Seeking intervention of Prime Minister Narendra Modi, exporters on Tuesday demanded a comprehensive package as the exports sector will take an "unprecedented" hit due to lockdowns to contain the COVID-19 pandemic.
In a letter to the Prime Minister, Federation of Indian Export Organisations (FIEO) President S K Saraf said that the exports sector is facing over 50 per cent cancellation due to the global lockdown on account spread of the coronavirus in the world.
"Our exports will take an unprecedented hit in such challenging times. The worst-hit are lifestyle products like leather, carpets, handicrafts, apparels etc which are having over 75 per cent cancellations. This will also put pressure on current account deficit as overseas remittance will decline so will be FDI/FIIs inflow in the country," he said.
Painting a grim picture, he added that there is a high risk of large scale unemployment after lockdown, especially in the labour-intensive sectors, if they are not accorded fiscal relief to ease their cash flow.
"Therefore, we request immediate help through rapid policy decisions to mitigate the crisis and prevent further structural damage to both industry and economy," Saraf said.
As part of the fiscal package, the organisation has demanded a host of measures including Rs 30,000 crore to exporting companies for easing their working capital liquidity issues, 2 per cent additional incentives under export promotion scheme - MEIS, subsidy on loans till March next year, and 50 per cent cut in GST rates for sectors such as hotels, aviation, and travel for next 12 months.
Besides, one-time amnesty for default in export obligations under advance authorisation, EPCG (export promotion for capital goods), and export-oriented units (EOUs) by waiving interest and penalty and charging only basic customs duty. It should also be extended to any other dispute in customs matter.
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"All existing pre and post-shipment finance in Foreign Currency or Indian Rupee should be extended on maturity by additional 90 -180 days on autoroute irrespective of the nature of contract and sanctioned limit.
Moreover, no deposit of money be insisted by banks where limit granted in foreign currency is crossed due to rupee depreciation," the president said.
He also urged for providing 50 per cent freight subsidy on air freight to encourage exporters to use air freight to compensate for time loss.
"All exports related refund and statutory refunds like duty drawback, GST should be paid to exporters, including risky exporters, within 15 days so as to ease liquidity at their end. A bond may be taken from risky exporters so as to recover it, if so warranted," he said.
He also said that the directorate general of foreign trade (DGFT) must give one time amnesty to all who could not apply or get MEIS (merchandise export from India scheme) due to system failure or minor lapse in shipping bills.
"Indian exporters should be given additional 2 per cent MEIS and labour intensive sector to be provided additional 4 per cent MEIS on exports up to 31st March 2021. The MEIS should be given without realization as it will be delayed in such tight liquidity globally. This scrip should be used for payment of any statutory levy including GST, Income Tax etc," he said.
Saraf said that EPF )employee provident fund) and Employees' State Insurance (ESI) should be waived for three months as labour-intensive sectors are in "extreme pressure" to pay wages, but do not have liquidity or cash flow to pay these funds.
The waiver of these funds for three months will cost the government Rs 18,900 crore, he said adding this can be given to companies with a minimum 50 per cent export turnover.
"The loan amount should cover six months gross salary and wages, rent and electricity charges. No additional collateral or paperwork to all industrial units who have a clean record with the bank before lockdown. The repayment should be in 18 equal instalments after 6 months initial moratorium, he said.