India may have to reduce its target of exporting $900 billion worth of goods by 2020, as the current growth rate doesn’t support the target, the Federation of Indian Export Organizations (FIEO) said.
The target is part of the current Foreign Trade Policy (2015-2020), which is currently undergoing its mid-term review. Senior government officials had earlier said the figures could see a downward revision.
Addressing the press on Thursday, FIEO Director General Ajay Sahai said exports would need to grow at a compound rate of 27 per cent annually till 2020 for the existing target to be reached.
“With global trade growth forecasts still slow at 2.4 per cent, I’m expecting a compound growth of 15 per cent annually for India’s exports”, Sahai said. This will allow total exports to reach a cumulative $700-750 billion by 2020, he added.
The industry body forecasts further challenges for exporters, expecting continued appreciation of the rupee in the near future. At the same time, further depreciation of currencies of major competitors is expected.
FIEO also raised the issue of exporters being left without crucial working capital under the upcoming Goods and Services Tax (GST) regime.
Exporters are now allowed duty-free import of goods that are used for the manufacturing of export products. However, under the GST, they would have to pay the duty upfront and apply for refunds later.
While the government had earlier promised the duty would be refunded within the first seven days of submission of complete application, it later added a further step of acknowledging each claim within three days after that.
Commerce and Industry Minister Nirmala Sitharaman had said that provisions had been made for additional refunds to the tune of six per cent interest if payments are late. The last 10 per cent of refunds would be subject to verification done by the revenue department.
However, FIEO President Ganesh Kumar Gupta said the interest on delayed payment would be received only after 60 days.
“The additional cost of credit to manage liquidity should be borne by the government if present exemption is not brought forward by the GST”, Gupta said.
The commerce ministry had formed a three-member committee, including Commerce Secretary Rita Teaotia, head of the committee on duty drawbacks G K Pillai, and a finance ministry official to submit issues raised on GST by exporters to the GST council.
This involves the treatment of current incentive schemes for exporters. Also, under GST, if exempt goods become inputs for products used finally for exports, export credits will not be provided for those products.