Activities Round Up

Date : 10 Aug to 10 Aug 2015
Place : New Delhi
Organised by : FISME

FISME delegation meets Sitharaman to discuss declining MSME exports

In the wake of falling trends in Indian exports for the last few months, a delegation from Federation of Indian Micro and Small & Medium Enterprises (FISME) today met Union Commerce Minister Nirmala Sitharaman to apprise her about the constraints faced by the MSMEs responsible for the decline in exports.
FISME, which has a network of around 750 MSME associations, also suggested measures to the Minister for enhancing MSME exports.
Some of the important issues discussed by the FISME’s Senior Vice President Anil Agarwal and Past President V K Aggarwal included Advance Licence period which has been reduced to 18 months; rigid provisions of the EPCH scheme; duty drawback scheme and more.
With regards to the Advance Licence issue, FISME said, “Previously advance authorization with validity of 18 months and revalidation up to 36 months was allowed. This period has been reduced to 18 months validity with one revalidation up to 24 months.”
Such straight jacketing may look fine on paper, but it is not pragmatic for MSMEs, the industry body pressed suggesting that the second revalidation could be considered for all existing cases where export obligation has been completed and for future the validity could be expanded for 36 months.
On the EPCH Scheme, the delegation was of the view that ease in importing of inputs has a huge bearing on ability to exports and the manufactured exports, especially high tech manufacturing such as engineering, capital goods etc, requires a very enabling import regime.
The delegation thus batted for the EPCH Scheme saying although the scheme is critical, the existing provisions are rigid and plastic and do not take into account the vagaries of international trade.
FISME further noted that since the inception of ‘Drawback for deemed exports’, the policy has always treated the drawback entitlement at par with physical exports.
“The Commissioner (Drawback) would announce two types of all industry drawback rates; one where CENVAT was claimed and second where CENVAT was not claimed,” Agarwal argued saying “However, in 2013 DGFT abruptly barred deemed exports from availing all industry rates while continuing the policy drawback for physical exports.”
He mentioned that the exporters were advised to get brand rates fixed for drawback if CENVAT had been availed, but the process is “detrimental” for smaller exporters who have to undertake cumbersome and expensive exercise of brand rate fixation despite being transparent.
The delegation further opined that while policy allows import from China in Chinese currency to reduce dependence on USD, number of consignments is stuck at Ports for want of provision in currency section where CNY is not recognised as eligible currency.
FISME sought for Sitharaman’s intervention to bridge the wide deviation between the political vision and attendant processes followed at ground.
The apex industry body for the MSME sector suggested measures such as formation of Niryat Bandhu; Rejuvenating Board of Trade; reviewing Export Promotion set; Mega MSME Export support programme; India outbound scheme and many more steps up to alleviate the causes for plunging exports.

FISME said there is a crying need to set up an institutional mechanism to address the issues of exporters related to DGFT and Central Ministries such as Finance, Agriculture, Commerce and Industry, External Affairs, Railways, Road Transport & Highways, MSME, Shipping, Textiles, Labour and also related to the State Governments.

“Affected exporters could enlist their problems with ‘Niryat Bandhu’ directly or through associations,” FISME suggested adding that the measure will have a salutary effect on reducing friction and inducing efficiency in export promotion processes particularly for MSMEs.
Further, pointing that the Board of Trade has become largely “dysfunctional”, the delegation called for reviving and rejuvenating the Board to discuss export strategy, monitoring progress of execution and suggest course correction.
For augmenting liquidity of the export sector, the industry body said the EXIM Bank should become more customer friendly and do away with the “impractical” practice of forcing Indian exporters to partially pick cost of finance to match competitive international financing by its competitors.
FISME said, “Exim Bank should freely permit funding under National Export Insurance Account (NEIA) scheme to the overseas.
Sitharaman, after discussing the issues and measures with the industry body, agreed to look into the matter and assured full support to boost exports.