The commerce ministry is weighing a mechanism to assist cash-strapped exporters, who’ve been awaiting the discharge of advantages price tens of hundreds of crores underneath a key official scheme, tide over the present Covid-induced liquidity crunch.
As per the mechanism being explored, the federal government might give an endeavor to exporters in opposition to their entitlement underneath the Merchandise Export from India Scheme (MEIS). Banks might then be impressed upon to lend to exporters (as much as the entitlement) in opposition to the endeavor on the repo price of simply 4%. Whereas exporters must bear the curiosity prices, such a transfer will assist them deal with the liquidity woes till the federal government lastly clears the dues, sources advised FE.
The difficulty of MEIS dues was raised by export our bodies at a gathering chaired by commerce and business minister Piyush Goyal on Tuesday. Goyal requested senior officers of his ministry to discover the proposal, amongst others, and assist resolve the difficulty on the earliest, mentioned a supply current within the assembly. The commerce ministry might quickly agency up a proper proposal to this impact and submit it with the finance ministry for clearance.
Commerce sources had final month mentioned exporters had been awaiting the discharge of scrips price not less than Rs 35,000 crore in opposition to their MEIS entitlement for FY20 and FY21. Inordinate delay in launch might intensify the present liquidity woe, limiting exporters’ capability to ramp up provides simply when demand from key markets seems to be bettering, in response to the sources.
Exporters have additionally requested the federal government to urgently announce refund charges underneath the Remission of Duties and Taxes on Exported Merchandise (RoDTEP) scheme, which changed the MEIS from January 1, 2021, however is but to be operational.
On the assembly with Goyal this week, Sharad Kumar Saraf, president of the exporters’ physique FIEO, mentioned whereas the official export goal of $400 billion for FY22 was achievable, the well timed launch of “advantages” underneath the MEIS, obligation disadvantage scheme and RoDTEP, and the sufficient movement of loans to exporters remained important. “This may assist in making exports worthwhile. In any other case, with the delay in refund, exporters profitability is worn out with rising curiosity burden,” Saraf mentioned.
Beneath the MEIS, the federal government has already accredited Rs 39,097 crore for FY20 and Rs 15,555 crore for the primary three quarters of FY21 (earlier than it was changed with RoDTEP). However a bulk of this quantity is but to launched, ostensibly because of the pandemic hitting the Centre’s useful resource mobilisation and the requirement of upper healthcare spending and different stimulus measures, exporters mentioned. The federal government has budgeted solely Rs 13,000 crore for the RoDTEP scheme for FY22 however the precise outgo may very well be a lot increased.
A senior official final month mentioned the federal government would quickly begin processing the MEIS advantages. Even RoDTEP charges will likely be introduced shortly. The delay within the clearance of MEIS advantages is nothing uncommon, although. In earlier years, such advantages had been usually delayed for causes, together with defective claims or unsuitable paperwork by exporters, the official had defined. This time round, the pandemic has largely contributed to the delay, he had mentioned.
Beneath MEIS, most exporters had been getting scrips amounting to 2-5% of the freight-on-board worth of the cargo.
Whereas exports have witnessed a roller-coaster experience in FY21 because of the pandemic, the federal government has stored a document export goal of $400 billion for FY22, in contrast with $291 billion final fiscal and $330 billion in FY20, as outbound shipments rose significantly over the previous two months, defying the Covid blues. Exports stood at $34 billion in March and $30 billion in April, up 3% and 16% from even the identical months of 2019 (properly earlier than the pandemic struck). Nonetheless, for the sustenance of the expansion momentum over the medium time period, exporters’ liquidity subject must be sorted out urgently.