FIEO president writes to PM urging government to support exports sector

Says helping hand may assist them to revive and bounce back once global situation improves

FIEO president writes to PM urging government to support exports sector
FIEO President, Mr Sharad Kumar Saraf.

Ludhiana: FIEO President, Mr Sharad Kumar Saraf has written to Prime Minister Narendra Modi urging the government to support the exports sector. The letter reads as under:

“Corona virus has given a serious jolt to global economy and more so to the global trade. It is already evident that COVID-19 has triggered a deeper recession than that of the 2008-2009 Global Financial Crisis. Much of the  developed  world  is   now  amid  the  greatest  economic disruption  since  the  Second  World  War.  The  Monetary  authorities  in various countries have undertaken unprecedented actions to support their exports  in  global  markets.US,  UK,  Canada,  Japan,  Germany  and  even Bangladesh has provided bail out/financial package to their industry to sail through difficult times.

Our exports will take unprecedented hit in such challenging times. The exports sector is facing over 50% cancellation. The worst hit are the life style  product  like  leather,  carpets,  handicrafts,  apparels  etc  which  are having  over  75%  cancellations.  This  will  also  put  pressure  on  current account  deficit  as  overseas  remittance  will  decline  so  will  be  FDI/FIIs inflow in the country.

Speed is of the essence in mitigating any crisis. Therefore, we request immediate help through rapid policy decisions to mitigate the crisis and prevent further structural damage to both industry and economy.

1.    Covid Interest free Working Capital Term Loan (Rs 1974 Cr) Government to allot Rs 30,000 Cr to exporting companies for easing their working capital liquidity issues.
➢ The loan amount should cover 6 months gross Salary and Wages, Rent and Electricity charges.
➢ No additional collateral or paperwork to all industrial units who have a clean record with the bank before lockdown.
➢ The repayment should be in 18 equal installments after 6 months initial moratorium. 
➢ May  be  an  extension  of  the  NIRVIK  scheme  to  Guarantee  the banks. 

Cost to Government:
Credit Cost 30,000 Cr @ Repo [email protected] 4.4% = Rs 1704 Cr (660 Cr + 1044
Cr)  (6 months moratorium + 18 months reducing balance)

Credit Guarantee Cost of NIRVIK @0.72% = 270 Cr (108 Cr + 162 Cr) (6 months moratorium + 18 months reducing balance)

Total Cost to GOI = Rs 1974 Cr

Sir, there is a high risk of large scale unemployment after Lockdown (especially in the labour intensive sectors), if they are not accorded fiscal relief to ease their cash flow.

2. EPF and ESIC waiver for 3 months (Rs 16200+ Rs 2700 = Rs.18900 Cr) Labour  Intensive  sectors  are  in  extreme  pressure  to  pay  wages,  but  do not have liquidity or cash flow to even  pay  the  EPF  and  ESIC. These sectors carry a huge cost of employment while facing over 75% order cancellations and may close.

  • Maximum Salary Eligibility to be limited to Rs 15,000.
 • Should be for 3 month period
 • Companies with minimum 50% export turnover maybe eligible

Assuming 15 million workers @15,000 Rupees PF @24%  for 3 months the cost would be 16200 Cr

15 million workers @15,000 Rupees ESIC @4% for 3 months the cost would be 2700 Cr

Total Cost to GOI: Rs 18,900 Cr 
3. Additional MEIS on Exports in 2020-21:
Countries are providing huge financial support to their exporters. China has  already  provided  3%  additional  Export  Tax  Rebate  on  exports  in March  ,  2020   .  Indian  exporters  should  be  given  additional  2%  MEIS and  labour  intensive  sector  to  be  provided  additional  4%  MEIS on exports upto 31st  March  2021.   The  MEIS  should  be  given  without realization  as  realization  will  be  delayed  in  such  tight  liquidity  globally. This  scrip  should  be  used  for  payment  of  any  statutory  levy  including GST, Income Tax  etc

4. Extension of Interest Equalisation Scheme for all exports:
Interest Equalisation Scheme, which lapse on 31st March, 2020, may be reintroduced immediately for all products upto 31st March 2021.

5. Implementation of RBI’s instructions:
All Banks (including private/foreign banks) must implement RBI relief measures announced on 27th March in full and they should not treat is as mere advisory. RBI may also clarify that pre/post shipment credit for exports are in the nature of working capital and thus eligible for concession granted on working capital.

6.  Reduction in GST rates particularly on Hotels, Aviation and Travel
&Tour operators:
GST rates for these sectors, which are going through the worst phase, to be reduced by 50% for the next 12 months to help these sectors.

7. One Time Amnesty in Advance Authorisation/EPCG/EOU and other default in Customs duties:
Amnesty for default in export obligations under Advance, EPCG Authorisation, EOUs by waiving interest and penalty and charging only basic customs duty. The same may be extended to any other dispute in Customs matter.

8. One time amnesty for filing MEIS applications (without any time limit) and transmission of shipping bill with No declaration for MEIS:
DGFT  must  give  one  time  amnesty to  all  who  could  not  apply  or  get MEIS due to system failure or minor lapse in shipping bills. Similarly, all Shipping bill with “No” declaration for MEIS may be allowed to be transmitted by Customs to DGFT for claiming of MEIS to ease liquidity at exporters’ end. It is an established law that major benefit cannot be denied due to minor lapse.

9. RBI may extend the tenure of pre-post shipment credit:
All existing pre and post shipment finance in Foreign Currency or Indian Rupee  should  be  extended  on  maturity  by  additional   90-180  days  on auto  route  irrespective  of  the  tenure  of  contract  and  sanctioned  limit. Moreover, no deposit of money be insisted by banks where limit granted in foreign currency is crossed due to Rupee depreciation.

10. Subsidy on air shipments and lowering of CONCOR charges:
Provide 50% freight subsidy on air freight to encourage exporters to use air freight to compensate for time loss. CONCOR may also be asked to reduce charges in view of challenging times faced by exporters.

11. Time bound Exports Refund in 15 days:
All  exports  related  refund  and  statutory  refunds  like  Duty  Drawback, GST etc   should be paid to exporters, including risky exporters ,   within
15 days so as to ease liquidity at their end. A Bond may be taken from risky exporters so as to recover it, if so warranted.

Sir, we humbly request you to kindly announce a comprehensive package for  exports  covering  the  above  issues  so  as  to  help  exporters,  many  of whom are on the brink of closure.

A helping hand may assist them to revive and bounce back once global situation improve, which is only a matter of time. However, the moot point is as to whether they will survive to see the revival?”