Finmin’s delay in grant of sops affects exports

The contraction in exports in March by 3.1 per cent following a 3.7 per cent degrowth in February can be corrected if the finance ministry and the commerce ministry work together to address the issues arising out of conflicting notifications by the two ministries and the tight fisted policy of the finance ministry, according to the EEPC India, the engineering exporters’ body.

The EEPC India has written nearly two months ago to the finance minister about his ministry holding back over `20,000 crore (of which `9,000-`10,000 crore is of the engineering sector) in the form of duty drawback, excise refunds of the exporters. But nothing has been done about it. Mr Anupam Shah, the chairman of the EEPC India, said that the problem has further been compounded by the customs authorities not allowing scrips earned by exporters through various government schemes to be used for the payment of customs duty on their essential imports.

Exports to Bangladesh and Nepal have been held up because of problems with the customs on the borders and China is the biggest beneficiary, but nothing is being done about it.

Mr Shah said that he has raised the issue of customs department’s insistence on a Bank Realisation Certificate (BRC) from exporters for claiming drawbacks refunds at Raxaul port at the Nepal land border, even as banks receiving foreign exchange remittances on behalf of exporters have stopped issuing BRCs on specific instructions from the director general of foreign trade (DGFT).

The customs officials don’t seem to be aware of the fact that in February 2009, the Central Board of Excise and Customs (CBEC) had done away with the system of submission of BRCs and a chartered accountant certificate was sufficient to verify drawback claims received by the exporters, Mr Shah said.

In the case of exports to Bangladesh, the Indian banks reportedly do not recognise LoCs drawn on Bangladesh banks.