Exporters Seek Interest Relief and Quicker GST Refunds

Exporters Seek Interest Relief and Quicker GST Refunds

Issue: Indian exporters are grappling with severe cost disadvantages due to high US import tariffs and delayed financial liquidity, prompting them to approach the government for a comprehensive package of credit support, tax relief, and expedited Goods and Services Tax (GST) refund mechanisms.

Facts:

• Indian exports to the US face severe trade barriers, including extra tariffs of 50%, while competitors pay only around 20%.
• Exporters met with Prime Minister Narendra Modi, Finance Minister Nirmala Sitharaman, and Commerce Minister Piyush Goyal to discuss mitigation strategies.
• Exports of gems and jewelry to the US contracted over 70% in September due to these tariffs, with cotton fabrics, garments, and marine products also facing sharp declines.
• The sectors present at the meeting included large employers like apparel, leather, engineering, marine products, handicrafts, and gems and jewelry.

Decision:

Exporters proposed that they would bear 15% of the extra US tariff if the government took steps to mitigate the impact of the remaining 15%. They requested immediate financial and procedural support, including the reintroduction of the Interest Equalisation Scheme (IES) and automation of GST refunds.

Key TakeDowns (Exporter Demands):

• Financial Mitigation:
  • Reintroduction of Interest Equalisation Scheme (IES): To reduce the cost of credit on pre- and post-shipment rupee export credit, thereby enhancing the competitiveness of Indian products.
  • Credit Guarantee Scheme: The Centre is considering launching a credit guarantee scheme for small and medium exporters for loans up to ₹100 crore.
• GST Refund Acceleration: There was a strong demand for automating the Goods and Services Tax refund process, particularly for unutilized Input Tax Credit (ITC) arising from the Inverted Duty Structure (IDS).
  • Note: The 56th GST Council decided to implement a revised system of granting 90% provisional refunds for IDS cases based on risk evaluation.
• Policy Focus: Exporters emphasized the need for a sustained focus on skilling, reducing raw material costs, and ensuring that ongoing trade negotiations (like with the US) secure duty reductions on key Indian exports (including steel, aluminum, pharma, and auto parts). * Market Access: More liberal support was requested for the Market Access Initiative (MAI) to fund market studies and trade fair participation to help exporters diversify into new markets.