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Dip in demand along with decline in the prices of oil, commodities and metal has affected India’s export. The country’s merchandise export has declined to $25.39 billion in December 2014 from $26.393 billion in December 2013, thus recording a dip by 3.77%. 
	 “Many of the sectors which exhibited double digit growth like leather and apparels have also shown moderate growth this month. More surprising has been the decline in export of rice, spices, gems &amp; jewellery, cotton yarn, fabrics, made-ups and handicraft. These are all labour intensive sectors and their slowdown will have a bearing on employment scenario as well,” said <keyword id="935381" type="UNKNOWN" weightage="20" keywordseo="M-Rafeeque-Ahmed">M Rafeeque Ahmed</keyword>, president of Federation of Indian <keyword id="35090" type="COMPANY" weightage="20" keywordseo="exports">Exports</keyword> Organisations (<keyword id="154579" type="CITY" weightage="20" keywordseo="FIEO">FIEO</keyword>). 
	 
	He added, “Huge efforts would be required in the balance three months of the current fiscal to reach the export target of US$ 340 billion. This would require average exports of US$ 33 billion per month as against US$ 26-27 billion per month in the past”. 
	 
	According to FIEO, the depreciation of the Indian currency coupled with the slight rise in inflation has given India an edge in exports. It also suggested that to further boost the export sector, the government must re-introduce interest subvention scheme as well as exempt all export sectors from paying indirect taxes.

Dip In International Demand Led To Decline In Exports In India: FIEO

The Federation of Indian Export Organisations (<keyword id="154579" type="CITY" weightage="20" keywordseo="FIEO">FIEO</keyword>) believes that the right export policies will help the government to achieve its FY 15’s export target of $340 billion. 
	 “The <keyword id="35090" type="COMPANY" weightage="20" keywordseo="exports">exports</keyword> have already reached US$ 216 billion and with exports of US$ 31 billion each month, we would reach the target,” said <keyword id="935381" type="UNKNOWN" weightage="20" keywordseo="M-Rafeeque-Ahmed">M Rafeeque Ahmed</keyword>, president of FIEO. 
	 
	However, he noted that one of the first initiatives to achieve the target was to introduce Interest Subvention Scheme for exporters. “Interest burden is hitting the small exporters who are losing their export competitiveness saddled with high interest rates,” added Ahmed. 
	 
	The apex body of exporters is happy with the data on exports recorded for November 2014. The exports grew by 7.3% over October 2014. The sectors that performed well in November included engineering goods, drugs and pharmaceuticals, gems and jewellery, cotton and man-made yarn, carpets, coffee, spices among others. 
	 
	“The positive growth of 7.3% in exports in the month of November coming on the heel of negative growth in October is very encouraging. While healthy growth have been witnessed in Readymade Garments and Organic &amp; Inorganic sector, our worry has been the marine sector which showed a decline in November,” stated Ahmed.

Exports Can Reach $340 Billion Target In FY 15

The Federation of Indian Export Organisation (<keyword id="154579" type="CITY" weightage="20" keywordseo="FIEO">FIEO</keyword>) wants the government to announce a new <keyword id="35067" type="ORGANIZATION" weightage="20" keywordseo="foreign-trade-policy">Foreign Trade Policy</keyword> (FTP) focusing on marketing, branding, e-commerce and services sector, and a five-year target for <keyword id="35090" type="COMPANY" weightage="20" keywordseo="exports">exports</keyword>. The apex body has also recommended the government to re-introduce interest subvention on exports. 
	 
	“Government should immediately re-introduce interest subvention on exports as uncertainty has impacted Micro Small and Medium Enterprises (MSME) exporters as banks have stopped passing interest subsidy to them thereby raising cost by 3%,” said M Rafeeq​ue Ahmed, President of FIEO. 
	 
	Ahmed has expressed his disappointment over the modest exports growth last month and attributed it to weak and unsystematic global recovery. “While the US and emerging economies are posting good results, Europe has again fallen into contraction. Another reason may be less spectacular growth in petroleum exports largely on account of softening of crude prices which has helped us in managing imports and trade deficit,” noted Ahmed. 
	 
	He also emphasized on the need to cut down on the paperwork required for doing business in the country. He asserted that the government needs to implement far reaching changes in procedures to reduce the high cost of operating a business in India. “Simplification, self attestation, EDI connectivity, risk management system should be the main plank for reducing transaction time and cost,” stated FIEO chief. 
	 
	The growth in exports slowed down to a five-month low in August, recording a rise of 2.5% over August 2013. On the other hand, the imports rise by 2.08% despite a decline in oil imports. 
	 
	Image: Indiatimes.com

FIEO Tells Government To Simplify Doing Business In India

The Federation of Indian <keyword id="35090" type="COMPANY" weightage="20" keywordseo="exports">Exports</keyword> Organisation (<keyword id="154579" type="CITY" weightage="20" keywordseo="FIEO">FIEO</keyword>), the apex body of exporters, is disappointed with the exports registered in the month of October. The association noted that sectors, which were expected to perform better in exports, recorded a negative or a meager growth last month. 
	 
	“Surprisingly, all our performing sectors, which were expected to bring a turnaround either exhibited negative or miniscule growth. While engineering, drugs and pharmaceuticals, gems and jewellery, cotton and man-made yarn, carpets entered into the negative territory joining petroleum and plantation sectors, growth has moderated in leather, apparels and marine sector. This is an alarming situation,” said M Rafeeque Ahmed, president of FIEO. 
	 
	He attributed the dismal performance of the export community to the dismissal of interest subvention on exports. “The Government should immediately re-introduce interest subvention on exports from April 2014 as banks have not only stopped passing interest subsidy to exporter specially MSME exporters thereby raising cost by 3% but also started recovering the same in absence of any communication from RBI or the Government,” added Ahmed. 
	 He also explained that the exporters wanted more clarity regarding the new foreign trade policy (<keyword id="82536" type="ORGANIZATION" weightage="20" keywordseo="FTP">FTP</keyword>) as they were facing problems while computing the costs at the time of new orders. The association has also suggested that the government should extend the present FTP of the previous government till the end of the current fiscal year. 
	 
	“The new Foreign Trade Policy should focus on marketing, branding, e-commerce, services exports, project exports, high technology exports. Far reaching changes in procedures are also needed to address high cost of doing business in India. Simplification, self -attestation, EDI connectivity, risk management system should be the main plank for reducing transaction time and cost,” stated Ahmed.

Re-introduce
Interest Subvention On Exports:   FIEO

The steep decline in the value of <keyword id="6431122" type="PERSON" weightage="20" keywordseo="euro">Euro</keyword> against the <keyword id="35208" type="ORGANIZATION" weightage="20" keywordseo="dollar">dollar</keyword> has send jitters among the export sector in India. According to Federation Indian Export Organisations (<keyword id="154579" type="CITY" weightage="20" keywordseo="FIEO">FIEO</keyword>), the dip in the currency value would have had a significant adverse impact on India’s export to the Euro Zone. 
 
“Such sharp and deep depreciation would affect India’s exports to Euro Zone significantly, which has already exhibited a decline of 0.18% in April-Nov,2014 when it touched US$ 33.27 billion as against US$ 33.33 billion recorded in the same period in 2013,” said M Rafeeque Ahmed, President of FIEO. 
 
The decline in the value of Euro is believed to be at a 14 year low. “While most of the economies were contracting and deflation was being witnessed, the Greek verdict has added economic uncertainties in Europe,” added Ahmed. 
 It should be noted that Greece has asked for debt break from the rest of the <keyword id="6355123" type="ORGANIZATION" weightage="20" keywordseo="EU">Eu</keyword>ro Zone recently. The country’s GDP has brutally shrunk while the unemployment has surged due to the seven year long recession in the EU. 
 
As per the Reserve Bank of India’s statistics, India exports to the EU has decelerated or has become negative over the last few years while the exports to countries such as the US, UAE, China and South Korea has risen between April and September 2014 on a year-on-year basis. 
 “Weaker demand conditions in most of these trade partner countries seem to have weighed on India’s exports. As growth in exports to most European countries either decelerated or turned negative, the EU lost its share in India’s exports albeit marginally,” suggested the report by <keyword id="30067" type="ORGANIZATION" weightage="20" keywordseo="RBI">RBI</keyword>. The percentage share of India’s export to the EU was 16.2% in April –March in 2013-14, which then dipped to 15.6% in 2014-15. Earlier, EU had accounted for 18.5% of India’s overall exports. 
 
Traditionally, India has primarily exported readymade garments, textiles, leather and leather products, gems and jewellery and machinery to the EU countries. In case of a sharp decline in the value of Euro, these sectors are expected to be adversely affected.

Weak Euro To Adversely Impact India’s Export

Emphasizing on the need to reduce the tax burden on the export sector in India, Federation of Indian Export Organisations (<keyword id="154579" type="CITY" weightage="20" keywordseo="FIEO">FIEO</keyword>) discussed the recently passed Goods and Services Tax (GST) and reintroduction of interest subvention scheme in its meeting with Finance Minister <keyword id="42575" type="PERSON" weightage="20" keywordseo="Arun-Jaitley">Arun Jaitley</keyword> on Tuesday. 
	 
	“We would suggest that all the incidence of Indirect Taxes at the State levy including electricity duty, sales tax on diesel and petroleum, turnover tax, etc. should be brought within the rebating mechanism so that exports are zero rebated at a time when global competition is becoming serious and orders are being lost on razor thin margins,” said M Rafeeque Ahmed, president of the apex body of exporters. 
	 Another recommendation made by the association is that exporters should be exempted from all indirect taxes especially the removal of the National Calamity Contingent Duty (<keyword id="2559752" type="ORGANIZATION" weightage="20" keywordseo="NCCD">NCCD</keyword>) on crude oil, which is levied at Rs 50 per tonne. 
	 
	“Petroleum product exports constitute more than 19% of India’s total exports. Removal of this duty on imports under advance licenses, which only earns the Government a sum of less than Rs 100 crore per annum, will lead to improving the competitiveness of Indian exports. Petroleum refining is a business based on very thin margin. NCCD imposes additional cost to the industry which is not rebated. At a time, when even exports of petroleum products have witnessed a decline in recent months, there is a need to take all necessary measures to support export of petroleum products,” added Ahmed. 
	 The association also suggested that exporters should also be exempted from excise duty on purchase of capital goods under the current Export Promotion Capital Goods (<keyword id="406717" type="ORGANIZATION" weightage="20" keywordseo="EPCG">EPCG</keyword>) scheme. 
	 
	Ahmed in its letter has also stated that exporters should not be liable to pay service tax. The body has stated that if overall exemption from service tax adversely impacts the revenues earned from taxes, then exporters should not be subjected to pay service tax on services taken from ECGC Premium, container freight stations, Clearing House Agents charges, terminal handling charges for exports, bank charges, services charges for conversion of inward remittances as well as courier charges for documents and commercial shipments. 
	 
	“The government should also look into the matter of delay in payment of duty drawback. It has been experienced that payment of duty drawback and central excise rebate claims are delayed during the last quarter of the Financial Year. Some technical omission is subsequently shown to justify the delay. Moreover, interest is also not paid on such delayed legitimate payments. The delay in the reimbursement of drawback claims causes a lot of problems for the exporters in carrying on with their new export orders. It is requested that an urgent and permanent solution of this problem may be found to avoid blockage of exporters working funds and consequent affect to country’s exports,” noted Ahmed. 
	 
	Apart from exemption from service tax and other such suggestions, FIEO has urged the government to re-introduce interest subvention scheme that expired on March 31, 2014. The government had provided 3% interest subvention on export credit for sectors such as handicrafts, handlooms, carpets, readymade garments, processed agricultural products, sports goods and toys along with 235 sub-sectors of engineering sectors. The association has suggested that the scheme should not just be confined to certain sectors, but should cover the entire export community including the services sector and merchant export sector. 
	 
	“We have also suggested the government to augment the flow of credit by bringing exports under Priority Sector (5% of total lending within 40% norms for Priority sector). The availability of capital and cost of capital is of paramount importance. The share of export credit in net bank credit has come down from over 9% to 3.5% in December, 2013 as against RBI desired level of 12%. Banks are reluctant to provide credit to export sector,” stated Ahmed. 
	 
	In its meeting with Finance Minister Jaitley, the association has also recommended the government to provide funds for marketing and branding exercise of Indian goods that are exported overseas. 
	 “An Export Development Fund (<keyword id="334775" type="COMPANY" weightage="20" keywordseo="EDF">EDF</keyword>), with focus on marketing research and innovative tools of marketing, would help not only the existing exporters but would attract new entrepreneurs in the field of exports. The corpus of the fund should be at least 1% of preceding year’s exports. The detailed guideline for operation of the EDF can be worked out by the Department of Commerce in consultation with stakeholders,” averred Ahmed.

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Dip In International Demand Led To Decline In Exports In India: FIEO

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Exports Can Reach $340 Billion Target In FY 15

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FIEO Tells Government To Simplify Doing Business In India

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Re-introduce Interest Subvention On Exports: FIEO

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Weak Euro To Adversely Impact India’s Export

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FIEO Meets Finance Minister Arun Jaitley, Suggests Exemption From Taxes

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