Export target for FY 22- USD 400 Billion and some critical issues

Recently speaking at CII event, Commerce Secretary B.V.R Subramanyam has talked about the target of USD 400 Billion for export of goods in the year FY22. While the target is laudable there are few practical issues which are required to be addressed particularly with respect to Foreign Trade Policy. New Foreign Trade Policy is expected to be announced on 30.09.2021 for the next 5 Years and may have 2 specific chapters one related to district hubs and second related to E-commerce. There is no doubt that there is great potential to increase exports using E-Commerce and developing district hubs.

However, there are few issues which need to be addressed on urgent basis which are elaborated hereunder-

1.?????Pre-import condition for advance authorization issued between 13.10.2017 to 10.01.2019.

Though pre-import condition is primarily for this period DGFT is not allowing imports effected after 10.01.2019 just because authorization is issued during this period. Even if the exporter pays IGST on account of so-called violation of the pre import condition there is no clear-cut guideline for availing input tax credit. The IGST if paid by Chalan, how to account for is a big question. Recalling of Bill of Entry is also not possible on account of procedural / time limitations. All these systematic problems need to be sorted out immediately and the best option in this case is to withdraw pre import condition retrospectively for all the exporters except for those who have purchased inputs from unregistered dealers.

2.?????Issuance of repeated deficiency letters and delay in granting redemption for advance authorization.

This issue requires urgent attention as delay in redemption causes substantial problems. Since the documentation is online, the query raised also needs to be addressed online. Many times, the cases are pending for very long period. Para 9.10(viii) of handbook of procedures provides time period of 15 days for granting redemption. In how many cases this time period is followed? It would be worthwhile for DGFT headquarters to seek data from all regional offices in this respect. I am sure the results would be surprising for them as well. It’s very easy to say that there are deficiencies but even if deficiencies are answered there is no action. Its interesting that para 9.10 also provides that cases of undue delay in disposal of applications may be brought to notice of head of regional offices by way of a written presentation which shall be promptly enquired into and responded to. In spite of this provision pendency is very huge.

What is required is to take up a special program of redemption of cases starting from 15 August and completing it by 30th September 2021. If need be, help from external agencies should be taken but pending cases for redemption must be disposed of. Same is the story for EPCG authorization as well. If redemption is not done exporter appears in “Denied entity list” which puts him into larger trouble not only in DGFT but also in customs. This issue is more procedural and does not require additional funding. If some small fee is collected from exporter for engaging external agencies, they would be more than willing to pay. Hope DGFT looks into this matter seriously.

3. ?E-commerce and District Hubs

In this particular case I have few suggestions for policy makers. Indian postal system has ready infrastructure in every district of India. Currently we do not send handwritten letters nor we use money orders hence the infrastructure can be utilised for development of exports. If select officers are trained particularly foe E-commerce experts via courier or post parcel mode it would save lot of money for the small exporters. Scanners can be provided at each district level office so that consignments can be checked expeditiously (like handbag is checked at the airport). The customs clearance and other procedural issues should be solved at the same place so that goods can be exported expeditiously. Banks can provide necessary support for such transactions at every district headquarter. If such small steps are taken and implemented it would be possible to increase exports and achieve target of USD 400 Billion for FY 2022.?

Policy needs to be a real instrument for export promotion. Currently policy focuses on indirect tax management and incentives. MEIS scheme is already withdrawn and new scheme of RoDTEP is likely to be handled by customs. It is therefore necessary that policy should create proper guidelines for E-Commerce and District Hubs.

?Your views are welcome!!

Sudhakar Kasture

Director, EXIM Institute (A Division of Helpline Impex Pvt. Ltd.)

Mumbai.?????????????????????????

E-mail: [email protected]