CRISIL: Structural issues challenge labour-intensive export verticals
The fall in India’s exports is disquieting and structural changes in labour-intensive sectors such as apparel and jewellery need to be undertaken fast, CRISIL said on Monday.
“Global merchandise trade is expected to grow stronger at 4.2 per cent, boosting trade intensity of growth for the first time in six years — world trade growth being higher than world GDP (gross domestic product) growth. Yet, India’s exports have not been able to take as much advantage of the stronger trade growth, unlike many of its Asian peers like Vietnam, South Korea and Indonesia,” a note released by the rating agency said.
The International Monetary Fund (IMF) recently said it expected global growth in trade to rise to 3.6 per cent in 2017 from 3.2 per cent in 2016.
However, the Federation of Indian Export Organisations has pointed out that almost ~50,000 crore of refunds under the goods and services tax (GST) are with the government, leading to a blockage of capital.
Exporters have said only about ~350 crore of refunds on account of the integrated GST (IGST) have been released by the government for July, against ~750 crore claimed by exporters.
Besides, input tax credits, which form a chunk of GST refunds, have not been released.
Responding to growing opposition by exporters, the government last week announced greater export support to items in the garment and the home furnishings sector under the Merchandise Exports from India (MEIS) and the Remission of State Levies (RoSL).
“The enhancement in MEIS rates will help in fulfilling orders for Christmas as it will result in easing the blocked capital,” said Ashok G Rajani, chairman of the Apparel Export Promotion Council. “It will help in the mitigation of the currency difference to some extent. However, industry is disappointed over the announcement of the RoSL because the rate is far below what it has recommended and there has been no consideration of a central taxes rebate in the announcement. Industry is witnessing a slowdown with jobs being lost and buyers migrating due to high cost.”