GST Council: A holistic & sane approach is essential for exports

GST Council: A holistic & sane approach is essential for exports


I am given to understand that people at the helm have no time to read. However, to my mind, this is the bane of this nation. If you do not read then how do you understand & if you do not understand then how do you apply your mind & if you fail to apply your mind then how do you reach a meaningful solution. I compare this breed of expert bureaucrats as youth who are Google experts i.e. for everything they will discover a solution in less than a minute without even understanding that whether the answer thrown up by Google is right or wrong. Thus they are the experts who know nothing except how to Google & get information. The bureaucrats need everything in a page or an executive summary but at the same time, I am surprised that how somebody could précis a 300 page report on a single page for clear understanding & if that single page is what matters then why was the detailed report prepared in the first instance for showcasing. Therefore, I fear these bureaucrats in terms of what they read, understand & implement? You will find examples of such misdeeds everywhere & on everyday basis. If you call for the file noting under the RTI then many a times, you will find file noting approval being allowed on file based on discussion. Nothing can be more idiotic than this because what was discussed did not appear on record & therefore prone to misuse & abuse. It clearly tells you that there is a lot to hide & nobody should get into trouble therefore for saving their own, this is the way out. Mind you, I am talking about high level in the GoI.
Now, we come to our issue that exports revival needs a holistic & sane approach which simply means that both the short term as well as the long term solutions need to be administered simultaneously:
1. The long term solution is restoration of duty exemption in respect of imports linked to exports through. This should be administered through GST route without any hassles for the exporter because as claimed by the GoI, GST is a robust system based on cross verification through a systems approach requiring minimal paper trail. I would like to bring to the attention of the readers that the GST allows the use of Advance Authorization for exempting imports related to exports for Basic Customs Duty then the same mechanism is good for the exemption of the IGST. The whole world uses duty exemption route under the aegis of the WTO & therefore India cannot give this up because this is the most beneficial way of facilitating exports. This writer had explained in detail in several articles that the treatment of exports under GST is a monumental error & one crises will force the hand of the government to restore the same. We have reached that stage in no time because of the effects of demonetization & glitches in GST implementation. It is still sensible to accept the errors & do course correction rather than be brave to kill the exports. Therefore sanity should prevail & full duty exemption restored.
2. The short term solution is that RBI should advance a loan through the banks at 0 rate of interest to the extent of refunds blocked with the GoI as on date. This advance is to be set off against the refunds received & if there is discrepancy in claims of getting the advances at 0 rate then 18% interest should be collected on the advance. Only the exporter gets this advance to the extent of the funds blocked by way of delay in respect of exports under GST refund route or the refund of GST on inputs going into the manufacture of exports. This is essential to adequately compensate the exporters for the mess created by the MoF in terms of the GST implementation. Failing this, you cannot expect any justice at the hands of the government because the government will never pay even that measly rate of interest @ 6% on the refunds held back illegally by extending the filing of the returns. Can you as an exporter then accept the proposition of the miraculous Indian bureaucracy that Heads I win & tails you lose. Therefore, it is essential for the exporters to raise their voice for their vested rights at this point of time.
This will resolve largely, the issues of the exporters & provide the required succour & regain the lost exports.
3. We have simply created a mess via GST & we need to clean the mess but that is not enough. We can go step further & utilize our foreign exchange reserves to fund exports & this will be a winning proposition for all concerned & administered in foreign exchange with no risk & will have earnings in foreign exchange. The scheme is very easy to operate through a SPV & provides better return to the RBI in respect of reserves & reduces the risks of RBI & provide relief to the exporters to the extent that you can stop actionable subsidy schemes like Rewards scheme floated under chapter 3 to stuff the pockets of the exporters on selective basis. I had given this suggestion more than 10 years ago when Mr. K.T. Chacko was the DGFT but then the bureaucracy is not willing to implement it because nobody wants to anything to do with increasing their responsibility & accountability.
 Please note that I can explain the need of the short, long term measures as well as the RBI administered scheme involving foreign exchange reserves though everything is made available in the public domain. If required, I can do it again & address any objection from any authority. We simply require the will of those in position to implement this. The exporters should also press the government to do the right things instead of being selfish.
(Author Rajiv Gupta can be reached at rajiv.pec@gmail.com)

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