Exports likely to contract 7-8% this year: FIEO

Exports this fiscal are likely to contract by about 7-8 per cent to around $290 billion despite a much steeper decline in the initial months of the lockdown due to a recent improvement in the situation, the Federation of Indian Export Organisations (FIEO) has estimated.

Impediments such as the delayed announcement of rates and reduced allocations under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme and a new provision of confiscation of consignments in case of misdeclaration under refund schemes, however, could hurt prospects if not sorted out at the earliest, say exporters.

“In the first nine months of the fiscal, exports were down by 17 per cent due to multiple factors including the lockdown, the world economy facing decline, serious problems with shipping companies and lack of containers. However, we should still be finishing the year with exports worth $ 280 billion to 290 billion, compared to $ 314 billion the previous fiscal. This is no mean achievement and shows the resilience of exporters,” said S K Saraf, President, FIEO, at a press conference on Wednesday.

Upbeat on FY22 exports

In fiscal 2021-22, exports could post growth of about 10 per cent to about $340 billion-$350 billion if the US and the EU could deal with the pandemic situation, FIEO further projected.

Commerce & Industry Minister Piyush Goyal is scheduled to meet exporters on Thursday to discuss the five-year Foreign Trade Policy to be announced on April 1, pointed out Ajay Sahai, DG, FIEO. The exporters’ body will suggest schemes that are compatible with WTO norms, such as subsidies on R&D and remodelling the SEZ policy, he said.

Commenting on the inadequacy of budgetary provisions for exporters, Saraf pointed out that just ₹ 13,000 crore under the RoDTEP scheme and another ₹ 2,500 crore for other schemes for exporters, which was much lower than payments of ₹ 55,000 crore to the export sector in earlier years.

“RoDTEP is supposed to be reimbursement of duties and taxes on exported products and is not actually a benefit or support. We don’t see any justification behind reducing the amount so much,” he said.

While FIEO had written to the FM seeking announcement of rates under the RoDTEP scheme (which has been implemented on January 1) by January 31 as the delay was causing problems in competitive pricing of exports, it had not yet happened.

Exporters are now hopeful that the rates for the 2,000 items that are included in the first part of the Pillai Committee (set up to fix RoDTEP rates) report already submitted would be announced by February 14 while the rest would be announced by February 28.

FIEO also wants the government to resolve uncertainty on the Customs provision of confiscation of goods on wrongful claims made for reimbursement or refunds announced in the Budget. “It is not clear how wrongful claims should be determined and it gives huge power to people at field level who will be interpreting it. And the cost is disproportionately high. For the benefit of 2-4 per cent (of exported goods) that may have been wrongfully claimed, the shipment is being confiscated. We must consider that if goods don’t reach buyers on time, the country’s image also takes a hit,” Saraf said.

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