Exports of commodities like engineering goods, chemicals, leather goods, heavy industries, handicrafts and carpets could be affected in a big way in the January-March quarter.
Exporters’ organizations have said that the country’s foreign trade could be affected in the current quarter. The reason for this is the liquidity crisis.
- February 18, 2021, 9:52 PM IST
FIEO has told the Ministry of Commerce that in the January-March quarter, exports of goods like Engineering Goods, Chemicals, Leather Goods, Heavy Industries, Handicrafts and Carpet could be affected in a big way. According to the organization, exporters are yet to get a tax refund of 25 to 30 thousand crore rupees from the government. Exporters are facing liquidity shortage due to non-refund of refunds. Due to this, many orders are not being fulfilled. Therefore, trade may decline. According to FIEO, this tax refund will be taken under the Merchandise Exports from India Scheme (MEIS) scheme. On the other hand, exporters are waiting for clarity on the new tax benefit scheme.
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Lack of funds with the government, hence loans received in lieu of claimFiyo director general Ajay Sahai says that exporters know the problem of shortage of funds of the central government. Therefore, the government should find a middle ground. The government should allow exporters to file claims and accept them. With this, the exporter will be able to take loan against the amount received in the claim.
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This scheme gives a boost to exports
The MEIS scheme was introduced by the Central Government in 2015. In November 2019, the scheme was discontinued by the government due to the World Trade Organization (WTO). Under this scheme, exporters get duty credit on the basis of exports and destination. It can be used to pay import duty. Significantly, the US had filed a case against India for the international trade disputes regarding the MEIS scheme. America had said that India has spoiled the trade and it gives direct subsidy to the exporters. WTO rules prohibit subsidizing exporters.
Confusion among exporters with new scheme
The central government has launched a new scheme for exporters in the general budget. 13 thousand crores has been kept for the scheme. Earlier, all the benefits of the MEIS scheme have been discontinued from 1 January 2021. But the government has not decided the rate of tax benefit of the new scheme. There is confusion among exporters about this.