With outstanding duty refund claims touching R4,821 crore, liquidity is becoming a cause of concern for exporters, according to the Federation of Indian Export Organisations (FIEO).
The pending claims of refund, in relation to service tax, duty drawback, rebate claims and VAT, are affecting exports. The issue is slightly worrisome for states such as Tamil Nadu, Maharashtra and West Bengal, where pendency rates are high and refunds have not been paid for more than a year.
At present, out of 118 ports, at 103, duty drawback claims alone are pending to the tune of R4,821 crore as against the normal pendency of R1,000 crore or less. At the Chennai seaport alone, drawback claims to the tune of R802 crore are pending.
Though exports in November were valued at $ 24.61 billion with a growth of 5.86%, exporters oragnasations said one-month data showing single-digit growth does not reflect the true picture.
“Delays at one of the major ports has also contributed to it besides modest performance of sectors such as gems and jewellery, electronics, petroleum, plantations, raw cotton and pharma. We have requested the customs authorities to clear the claims, but they say it is a budgeting problem. This used to happen in February, but now they appear to be more concerned about meeting their revenue targets,” said Rafeeque Ahmed, president of FIEO, on Monday.
Despite the issues, FIEO expects the government to exceed its $325-billion export target for 2013-14 by $10-15 billion.
“The housing market and business spending have slowed in the US while EU is still trying to come out of the woods. We are concerned with the instability in the middle-east and north Africa and legal disputes with many Latin American governments. Venezuela has imposed many restrictions on current and capital account,” he added.
On the forthcoming RBI policy, Ahmed said that another increase in rates will act as a dampener for the manufacturing sector and the cost of credit for exports remained much above the international benchmark blunting the competitive edge of India's products.