DGFT simplifies composition fee for export obligation extension - Exportify Pulse Edition - January 20, 2023

DGFT simplifies composition fee for export obligation extension

The directorate general of foreign trade (DGFT) on Wednesday said it has simplified the process of levying composition fee in case of extension of export obligation period under advance authorisation scheme, a move aimed at improving ease of doing business.

An advance authorization scheme allows duty-free import of inputs, which have to be mandatorily used in products that are required to be exported within a specified time. They are not allowed to sell the products in the domestic market.

A provision of the handbook of procedures of the foreign trade policy (FTP 2015-20) "has been amended to simplify the process of levying composition fee in case of extension of export obligation period under advance authorization scheme and for higher IT enablement of DGFT", DGFT said in a public notice. 

The simplification of calculations for composition fee helps in automation and faster service delivery by making the process more efficient and easier to understand, the commerce ministry said in a statement.

The previous formula for composition fee was convoluted and difficult to understand, which made the process more tedious and strenuous for exporters.

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Government set to ban 25-year-old oil tankers, bulk carriers and other ships calling Indian ports

The government is set to ban 25-year-old oil tankers, bulk carriers, and general cargo vessels, both Indian registered and foreign flagged, from calling Indian ports to load and unload cargo as it looks to encourage a younger fleet to improve safety, meet global rules on ship emissions and protect the marine environment from pollution during mishaps.

In the case of gas carriers, fully cellular container vessels, harbour tugs (those operating within ports), specialised vessels such as diving support, geo-technical, pipe laying, seismic survey, well simulation etc, dredgers and offshore fleet, the age limit for operating into and within India will be set at 30 years.

For anchor handling tugs and tugs involved in long tow, non-self-propelled ocean-going cargo carrying barges and any other vessels, the age cap will be 25 years, according to a draft order written by the Directorate General of Shipping (D G Shipping).

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Budget 2023 should ease credit access, develop infra, subsidy for MSMEs to boost exports: CareEdge survey

Trade, import and export for MSMEs: A budget expectation survey by credit rating agency CareEdge on Wednesday comprising 364 respondents from key industries suggested measures to support merchandise exporters. Developing export logistic infrastructure was the key expectation of 71 per cent of respondents followed by easy credit availability suggested by 58 per cent. Support in overseas marketing was also suggested by 34 per cent of respondents. Other measures suggested were credit subsidy for MSMEs, tax reliefs, expansion of the Production Linked Incentive scheme etc.

The suggestions for the upcoming union budget come in the backdrop of challenges faced by exporters including reduced demand in key markets because of fear pertaining to the looming global recession and high inflation.

 Importantly, the Reserve Bank of India (RBI) in March last year RBI had announced the extension of the interest equalisation scheme for pre and post shipment rupee credit for MSME exporters till March 2024 from September 2021 in order to boost shipments. Moreover, the interest equalisation rates were also revised to 3 per cent for MSME manufacturer exporters and 2 per cent for manufacturer exporters and merchant exporters.

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RMG exports fail to touch pre-Covid level; slowdown concerns remain

When India’s ready-made garments (RMG) exports were expected to touch the pre-Covid level, the ongoing recession and war in the Westerns world have become a roadblock for the sector. RMG exports from India touched $11.841 billion during the first nine months of the financial year 2022-23, up 6.5 per cent from $11.123 billion in 2021-22, based on data shared by Tirupur Exporters Association (TEA).

The current year’s numbers are 44 per cent higher compared to first nine months of 2020-21 ($8.199 billion), while it had already touched $12.386 billion during the April to December period of 2017-18. In November and December 2022-23, RMG exports saw a rise of 12 per cent and 1 per cent respectively, after showing a decline for four consecutive months from July to October.

From April to December, out of $6 billion total imports that the country saw, around $3.303 billion was coming from Tirupur only. For the last five months, exports from Tirupur was down in dollar terms, posting a decline of 14.7 per cent in August, 30.7 per cent in September, 39.9 per cent in October, 6.9 per cent in November and 10.1 per cent in December. Exports from Tirupur had increased from Rs 26,000 crore in 2018-19 to Rs 33,525 crore in 2021-22. This has already crossed over Rs 26,000 crore in 2022-23 rupee terms. Owing to a decline in demand, buyers were also asking for a discount of around 15 per cent from exporters in Tirupur.

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Editor's Note

India's merchandise trade crosses the $1-trillion mark in 2022\

India’s merchandise trade crossed the $1-trillion mark in calendar year 2022 with the share of exports at $450 billion and imports at $723 billion. This comes amid growing uncertainty on the external front.

Outbound shipments grew 13.7 per cent year-on-year (YoY) in 2022, while imports rose by 21 per cent, commerce and industry ministry’s data showed.

Exports witnessed a robust double-digit growth in the range of 34-20 per cent during the first six months of the year.

Thereafter, the growth started falling to single digits July onwards, closing the year at a 12 per cent contraction. This comes as recession fears in developed economies weighed on exports from India.

The sustained growth in exports can be attributed to the pent-up demand factor due to the opening up of most developed economies in 2021, with the easing of Covid restrictions.

Besides, India saw a significant jump in exports to developed markets such as the US, Singapore, Hong Kong and European nations such as the Netherlands, the UK, Belgium and Germany, among others.

Before this, over the last decade, merchandise exports from India hovered around $260-330 billion, with the highest being $330 billion in fiscal year 2018-19.

Around this time, a substantial amount of goods were being exported to neighbouring countries, predominantly the ASEAN nations.

According to a report published by Global Trade Research Initiative (GTRI), the $1 trillion total merchandise trade has been achieved despite gloomy conditions worldwide.

“This also prepares us for a tough year ahead as GDP (gross domestic product) growth in major economies slows down to less than 3 per cent in 2023,” said the report, authored by former Indian Trade Service officer Ajay Srivastava.

Of the total merchandise imports of $723 billion in 2022, two-thirds comprised five items — crude oil ($270 billion), coal ($80 billion), gold and diamond ($80 billion), electronics ($72 billion) and machinery ($55 billion), the report said.

On the other hand, exports have been dominated by engineering goods, gems and jewellery, drugs and pharmaceuticals as well as electronic goods.

Mounting geopolitical turmoil due to the Russia-Ukraine conflict, high inflation and monetary policy tightening in developed economies have resulted in recessionary trends in the US and Europe.

Last year, the World Trade Organization (WTO) projected 3 per cent growth in volume of global merchandise trade in 2022 compared to 9.8 per cent growth in 2021.

Source: Business Standard