Merchandise exports fell in March for a 17th month in succession. During financial year 2015-16, exports contracted by $49 billion, a drop of 15.9 per cent over the previous year.
The commerce ministry said the trend is in line with other major world economies. And, that in volume terms, the fall is not as severe as in value terms, and that the trade deficit is also falling, due to a fall in import and a net surplus in services export.
That is cold comfort for exporters who expect the government to take some steps immediately to give them some relief. They're struggling to fulfil the export obligation (EO) against authorisations issued under the duty exemption scheme and Export Promotion Capital Goods (EPCG) scheme. The EO period can be extended for all advance authorisations and EPCG authorisations by two years through a public notice, without requiring the exporter to seek any endorsements. That will reduce the need to approach the authorities for EO period extensions or policy relaxations. A similar initiative was taken in 2009 by the previous government.
Export Oriented Units (EOU) and those in special economic zones (SEZs) are finding it difficult to meet the positive Net Foreign Exchange Earning criterion.
For monitoring the performance of EOU and SEZ units, two years can be declared as blank years. Such a relief was given by the government in 2002. There is no reason why this one cannot do so.
The second EO period extension for advance authorisation holders is allowed only if at least half the EO is fulfilled on a pro rata basis. Also, the composition fee at 0.5 per cent on the unfulfilled EO for every month of extension is steep. These conditions can be diluted and composition fees relaxed. That will reduce costs and hassles for exporters.
The Merchandise Exports from India Scheme (MEIS) gives transferable duty credit scrips at notified rates to exporters. These can be used for payment of customs or excise duties and service tax. The scrips are given on the basis of export proceeds realised.
The procedure requires exporters to first apply to the licensing authorities, then take the scrips to the Customs for registration and then utilise or sell it. Beside costs, this process takes time before the benefits are realised in cash because the benefit accrues to the exporter only upon sale of the scrip or utilisation of the scrip for excise or customs duty or service tax payment.
It would be far better to disburse the MEIS benefits in cash immediately after export, the way duty drawback is disbursed.
That way, intervention of the regional offices of the Directorate General of Foreign Trade can be eliminated, reducing the costs and delays considerably.
Many exporters doing projects abroad find the retention money comes in quite late.
They have to wait till that part is realised before filing MEIS claims or forgo the benefits on retention money portion.
The government should enable exporters to file supplementary MEIS claims for retention money realised later.
These are only some of the many facilitating measures the government can take to help exporters. These do not involve outlay of more money. So, there is no reason to dither on taking these decisions.
tncrajagopalan@gmail.com
