NEW DELHI: Only nine months after the new Foreign Trade Policy was introduced, garment exporters are calling for changes in key operational mechanisms in the export process, which they claim hampers ease of doing business.
The Apparel Exports Promotion Council (AEPC), the apex body for garments and textiles exporters, has placed their demands with the textile ministry for simplifying authorisation, inspection and classification norms under the current policy.
Primary among these is a demand for withdrawal of landing certificate for exported goods which is required as proof to claim benefit under the Merchandise Exports from India Scheme (MEIS). The MEIS scheme, introduced in April, 2015, to boost sagging exports currently cover tariff lines for 5,012 items that now earn duty credits.
Exporters have pointed out getting the documents to show proof of landing at the destination country entails cost and delay. Also for MEIS, AEPC has demanded that electronic shipping bills be sufficient for declaration of intent and no other options be asked from exporters.
While filing the shipping bill, exporters are required to declare they are claiming rewards under MEIS and to mark ‘Y’ in the reward item box. Recently many had complained of inefficient customs house agents inadvertently ticking ‘N’ in the reward item box while filing the shipping bills with Customs. Thus, even though the item in many cases was eligible, once an ‘N’ had been ticked, such shipping bills were not transmitted to the online system run by Directorate General of Foreign Trade (DGFT).
To help exporters claim the MEIS benefits in such cases, DGFT has allowed them to give physical copies of the shipping bills after filing an MEIS application to its regional authorities. However, this relaxation is restricted to exports made in April and May in 2015. An extension on this has been demanded.
Although India’s cumulative exports in the category of Apparels was 12.13 billion for the current financial year leading up to December, the industry has been spooked by Vietnam securing zero duty access to the EU market.
Implementation of zero duty from 2017 is expected to boost the growth of Vietnamese exports which has already beaten India as the world’s third-largest garment exporter. Indian products face restrictions like a hefty 9.6 per cent import duty since the India-EU Broad based Trade and Investment Agreement (BTIA) is yet to be finalized.
Also worrying is the Trans Pacific Partnership Agreement allows export opportunities by Vietnam to the United States with a benefit of 17-30 per cent export duty relief. The US accounted for 22-30 per cent of India’s garment exports in recent years. Indian exporters have to pay duty in the range of 14-32 per cent.
Analysts have warned some Indian companies may shift base to Vietnam, like they did some years ago to Bangladesh to grab duty advantage in exports as well as low labour costs.
In such a scenario, AEPC Chairman Ashok G Rajani has called for stimulus from the government saying the garment export industry has the potential to optimally generate on an average 2200 jobs on an investment of Rs. 30 Cr in land, building machinery and utilities. Exports to the tune of Rs. 120 crore can also be achieved.
AEPC has stated the figures were industry average over a long period. To facilitate easier transportation and avoid corruption, government has been requested to learn from long term rival Bangladesh, allowing vehicles carrying finished export merchandise and headed towards exit points like sea ports, airports and railheads to display “On Export Duty” signage. Same has been asked for vehicles carrying input materials for production of export merchandise with a signage of – “On Export Processing Duty”.
Calls for proper identification and classification of goods have also been demanded, going forward from the current challan system currently followed by the government.
In order to boost competitiveness, AEPC has demanded the norms for Advance authorization for annual requirement be relaxed. Required for all duty exemption schemes, it has asked the authorization be allowed for garment exporter only based on his past performance.