FIEO: India can gain from tariff war
While India’s exports to US and China grew by over 11% and 35% in Apr-Dec 2018, the contraction in global imports will affect exports performance, says Ganesh Kumar Gupta, President of the Federation of Indian Export Organizations (FIEO).
He said that India can gain a lot from ongoing tariff war by creating production capacities so as to meet the demand of major economies.
Gupta has once again reiterated his demand for urgent and immediate support including augmenting the flow of credit, higher tax deduction for R&D and better fiscal support including augmenting the budgetary support for marketing and exports related infrastructure.
Gupta said the January 2019 exports growth of 3.74% to US$27 billion was nominal due to tough global condition and some constraints on the domestic front.
Global trade growth is slowing down and global economies including China and South East Asian nations are also facing contraction in manufacturing worsening the fragile global situation.
Almost all the sectors during January have shown nominal growth.
However, petroleum was one of the sectors which showed higher negative growth further pulling down the overall exports for the month by about 3%, opined Gupta.
Twenty-two of the 30 major product groups were in positive territory, though many with marginal growth during January 2019.
On the imports front, January 2019 saw meagre growth of just 0.01 percent that too due to increase in gold import. Spin off effect due to global tariff war has continuously been impacting the country’s trade both imports and exports.
Meanwhile, FIEO has highlighted Gupta’s talking points at the Board of Trade Meeting held on 15 February 2019.
Fiinews.com reproduces these points:
The global trade has entered a tough phase in the second half of 2018 and is expected to slow down further in 2019. Oil prices are expected to remain below US$60 per barrel while prices of metal are expected to weaken further. This will reduce the growth of global trade both in volumes as well as value.
New tariffs introduced since the beginning of last year have affected about 12% of US goods imports, 6.5% of China’s goods imports, and about 2.5% of global goods trade. While our exports to US and China grew by over 11% and 35% in Apr-Dec 2018, the contraction in global imports will affect our exports performance.
While we do not have much control over global developments, the issues at the domestic turf should definitely be looked into. The intervention through the interest equalization benefit has helped the Micro, Small and Medium Enterprise (MSME) manufacturers as well as merchant exporters of the specified tariff lines but the bigger concern is the flow of credit. The recent data by RBI shows a credit decline of over 50% which is bound affect the flow of exports adversely. The liquidity is further tightened by the GST regime which provides for a refund mechanism as the e-wallet Scheme is nowhere in sight.
There has been improvement in customs processes and procedures yet exports consignments are delayed for one reason or the other. Commerce Ministry should direct all customs authorities not to withhold an export consignment though they may delay the grant of exports benefits, if exporter is not complying with their query.
While we have a detailed memorandum for perusal of the Commerce and Industry Minister, I would briefly like to flag few important issues:
1. Scheme may be brought for promoting branded exports both at the country level as well as at the companies’ level.
2. For providing marketing and infrastructure support, the budget for MAI and TIES (Trade Infrastructure & Export Scheme) be enhanced significantly.
3. Scheme for sales to foreign tourists may be announced immediately to support handicraft, textiles and tourism sectors.
4. Interest Equalization Scheme may be extended to all sectors and at least to all Agri commodities.
5. FIEO may continue to be recognised as the agency for Services Exports (other than 13 services which may be earmarked to SEPC).
6. The e-wallet facility may be introduced from 1.4.2019 else exporters may be provided an exemption from GST on domestic procurement as available in pre-GST regime.
7. The ITC refund mechanism should be made completely online to save transaction time and cost.
8. The pre-import condition for advance authorization may be withdrawn retrospectively.
9. Court has allowed coverage of all types of valves for MEIS benefits. Accordingly, DGFT Pune allowed 6 months’ time to companies to file applications. Needless to say that many companies, who have filed the applications after the issuance of the Trade Notice by DGFT in Pune, have already received this scrip while others have been denied the same citing the reason that the said Trade Notice has been withdrawn and no longer in operation. This has created an anomalous situation as two similarly placed exporters have been treated differently. It is, therefore, request you to kindly look into the matter and provide the option to other exporters also to claim the MEIS benefit provided such claims have been filed within 6 months from the issuance of the Trade Notice by local DGFT. fiinews.com
