GST-led liquidity crunch forcing exporters to refuse orders: FIEO
Liquidity problems emanating from delay in refund of Goods and Services Tax (GST) is forcing exporters to turn down new orders, exporters' body FIEO said today.
The Federation of Indian Export Organisations (FIEO) also said that micro, small and medium enterprises (MSMEs) are cutting their workforce due to cash crunch.
FIEO Director General Ajay Sahai said that exporters are worried with the delays in the refund.
"Many of them have not received a single rupee in last seven months or so. Few exporters have refused new orders as they have no liquidity to finance new exports. Liquidity crunch has forced many MSME to cut the workforce also," he told .
Sahai said that as per the feedback from exporters, about 80 per cent of the refund is pending and the tax authorities are not accepting the application of input tax credit (ITC).
The organisation has time and again raised their concerns on GST, saying it would dent the liquidity situation of traders and increase compliance cost of merchant exporters.
Before GST, exporters used to get ab-initio exemptions from duties. But now, they have to pay first and then seek refund.
Due to this process, FIEO had stated that about Rs 1,85,000 crore could get stuck with the government.
On the proposal to introduce e-wallet mechanism to resolve the liquidity problem, Sahai said it is supposed to be introduced from April 1 this year "but still even broad contours of the scheme have not been notified".
He said that so far no consultation has happened with the trade and industry.
"We are apprehensive whether the scheme will be introduced from April 1 or at a later date," he added.
The country's total merchandise exports during April- December 2017-18 grew by 12.05 per cent to USD 223.512 billion.