At Europe’s largest lifestyle expo, Indian exporters continue to feel the bite from GST 

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“The Government has to deliver on GST and the promises it made. Small traders like us are feeling the pinch of GST quite hard, and it needs to be arrested,” says Shah. (Pic: Messe Frankfurt Exhibition GmbH / Petra Welzel)
India packed off the third-largest contingent of exhibitors at the Ambiente 2018, Europe’s largest lifestyle expo on home, decor and living trends. Exhibitors from across the country – 415 of them – had assembled at the sprawling Hall No 10 to display their wares, and solicit inquiries, presumably from international audiences.

But for most of the Indian travelling lot, there was a subdued air of disenchantment. Almost everyone agreed that it had to do a lot with the aftereffects of the Goods and Services Tax rollout, and the little help received from the government.

“There has hardly been any support from the Government. The GST refund that was promised to us has not come into effect,” Asad Shamsi of Iqbal Paramount Metal industries, said.

For Shamsi, this is not the first visit to the Ambiente. Shamsi, who came with four members of his family from Moradabad, is paying 250 Euros for a square metre of space and while he has received 8-10 serious enquires so far, he does not know how many will convert.

That’s something Quresh Husain of Mairaj Brothers agrees with. He says that the delay in GST refund has led to a 25-30% working capital being blocked.

According to Ajay Sahai, DG & CEO, The Federation of Indian Export Organisations (FIEO), in the first nine months of this fiscal India has clocked around 12% growth in exports and touched about $224 billion in value terms and therefore is on course to achieve $300 billion of exports. “But, export is passing through tough times, mostly because of the domestic factor as well as the global factor,” says Ajay Sahai, DG & CEO, The Federation of Indian Export Organisations (FIEO).

According to the recent Economic Survey, export growth in 2016-17 was fairly broad based with positive growth in major categories except textiles & allied products, and leather & leather manufactures. “In 2017-18 (April – November) among the major sectors, there was good export growth in engineering goods and Petroleum crude and products; moderate growth in chemicals & related products, and textiles & allied products; but negative growth in gems and jewellery,” said the Survey.

Export

Sahai says when it comes to the global factor, there has been a huge volatility in currency as the Indian rupee is appreciating whereas most other competitor currencies are depreciating. “At home the major problem which the sector faces is around GST and the time lag it takes to claim refunds. Since the cost of credit is pretty high in India, this is blunting the competitive edge of Indian export depending on sector to sector and the production cycle. But, on a rough estimate we feel that in most of the cases the competitive edge is blunted by around 1-1.5%,” says Sahai.

When the alarm bells started ringing that an estimated Rs 65,000 crore worth of exports could be stuck by the end of 2017, the GST Council on October 6, 2017 announced a slew of measures, including putting in place a refund process for input tax credit. However, it is clear the process has not fructified and exporters still feel the pinch.

“The Government wants us to better China. But, it refused to extend any of the help that Chinese traders get from their government,” Husain says.
Shashwat Shah of Lois Creations, that deals with metal and glass gifting products, has been a regular at the Ambiente for 14 years now, and while he says that he has received serious inquires, he agrees that the mood is relatively quiet.

“The Government has to deliver on GST and the promises it made. Small traders like us are feeling the pinch of GST quite hard, and it needs to be arrested,” says Shah. Another exhibitor, Jai Gupta, agrees and echoes similar views. Gupta says that for the 200 plus traders from Moradabad who have made it to Frankfurt this year, there is a cloud of GST that’s been looming large.

“We can ever think of taking on China if we cannot get our basics right,” he points out, ruing the delays and confusion around GST refunds.
But not everyone is complaining. Mohanish Nair, deputy manager, Yera, says that the rollout has brought down costs, “Compared to last year, the hidden costs have gone down.”

The writer was in Frankfurt at the invitation of the Messe Frankfurt Council to attend the Ambiente 2018 expo )

[“Source-economictimes”]