K.R. Srivats

New Delhi, March 21

THE Federation of Indian Export Organisations (FIEO) has suggested that inland freight may be reimbursed to units in inland States that are at least 500 kilometres away from the major ports.

Currently, the practice of granting transport re-imbursement (subsidy) is confined to backward regions (like the North-East). The FIEO President, Mr O.P. Garg, has now in a memorandum to the Union Commerce Minister, Mr Kamal Nath, held that the transport subsidy be extended to land-locked States/Union Territories such as Uttar Pradesh, Haryana, Delhi, Madhya Pradesh, Rajasthan and Punjab.

The memorandum came less than a fortnight before the Government's announcement of modifications to the Foreign Trade Policy. "These States are in a disadvantageous position, as they are far away from the gateway ports. The units located here have to incur additional freight both while importing the inputs and exporting the products," the FIEO memorandum said.

On the proposed value added tax (VAT), the Federation has held that exporters would prefer VAT exemption rather than the proposed system of refund of input-stage VAT.

"Our experience with Government of Haryana where VAT has been in place from April 1, 2003 shows that it has taken between 9-12 months to get refund of input-stage VAT. Exporters hardly have the resources to pay and get refund after such a long duration," the FIEO memorandum said. The White Paper on VAT stipulates refund of input-stage VAT to exporters within three months.

(This article was published in the Business Line print edition dated March 22, 2005)
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