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Chairman

As I write this piece, we are completing nearly two months post the GST era. The organised industry and the exporting community seem to have now got a good measure of the various intricacies of the GST provisions and with respect to export. The government has provided guidance notes, both general and sectoral, as well as clarificatory notifications and circulars. In particular, member exporters had requested us to urge the government to do away with the need of Bank Guarantee in case of exports being undertaken through the Bond route. We, along with other Export Promotion Councils, had taken up the matter at the different levels of the government. The CBEC responded positively through Circular No.5/5/2017-GST dated 11 August 2017, which has now allowed the waiver of Bank Guarantee in case the exporter submits a self-attested copy of the proof of registration with a recognised Export Promotion Council.

The ball now shifts from the Finance Ministry to the Commerce Ministry as exporters are keenly awaiting the announcement of the Mid Term Foreign Trade Policy. A key demand is to exempt merchant exporters from the payment of GST at the time of purchase of the product from their respective manufacturers before being exported. The current thinking is that since the transaction of purchase between the merchant and manufacturer is essentially a domestic transaction, they are subject to the respective GST. We believe that there is, however, a strong logic to do away with this leg of transaction when the goods are, in any case, being exported out. This will not break the value chain as transaction between the merchant exporter and the manufacturer is virtually at the end of the chain and hence there is no break in the chain. Rather, it simplifies the documentation procedure considerably as well as reduces the blockage of funds of the merchant exporters. Media reports indicate the government may come with a system of e-wallets to reduce fund blockage. While that would be helpful, it will not fully help to sort out the problem.

Exporters are still keeping their fingers crossed with respect to the refund of GST that has been paid while exporting during the month of July. This will test the promise to refund exporters 90 percent of their claims without verification within a period of 10 days of applying for refund. I do hope that the GSTN is a robust network and it is also hoped that the ICEGATE and DGFT EDIs will be upgraded so that there are no delays in the refund payments. Our members have repeatedly complained that the DGFT website is extremely unstable and it is often difficult to upload the documents pertaining to MEIS, Advance Authorisation and EPCG licenses. Similarly, there has been complaints of ICEGATE unable to take the load post-GST as a result of which the filing of Bills of Entry were not possible leading to late filing fees being levied on importers despite no fault of theirs. It is also important to smoothen the procedure for closure of Advance Authorisation and EPCG licenses. It should not be very difficult to carry such low hanging trade facilitation measures given the remarkable digitalisation with respect to Income Tax and now with regard to GST.

With respect to engineering export, overseas shipment grew by 7.96 percent during July 2017 to $5.18 billion from $4.7 billion in July 2016. The cumulative engineering exports during April-July 2017 recorded a higher 13.03 percent growth over the same period last year. The July export performance, lower than average of the four months, is also largely because of the nearly 45 percent increase in exports of primary iron and steel indicating that the exports growth is happening at the lower end of the chain. EEPC India has consistently propagating the need to conserve primary products to boost value added production and their exports.

EEPC India will be participating in major Machine Tools Exhibitions in EMO, Germany and thereafter in MACTECH 2017 in Cairo, Egypt. This is one segment that EEPC India has been supporting as it holds the future towards technological advancement. Machining and precision engineering are areas where India has traditional skills and historical knowledge and we must nurture this segment for future growth.

I do hope that the members would appreciate this edition of the magazine and will continue to write to us with their comments and suggestions.

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