CBIC Takes Various Steps to Reduce Disruption to EXIM Trade

DGFT issued 3000 MEIS scrips to exporters after lockdown

“The Central Board of Indirect Taxes and Customs (CBIC) has taken various measures to provide relief to exporters in the wake of COVID-19. Some of these measures are automated customs clearance system, acceptance of undertakings in June 2020, provisional assessment in clearing good, special refund and drawback disbursal drive, exemption on medical equipment such as masks, PPEs etc., waiver in late fee, deferment of RFID sealing movement of goods from warehouses, waiver on demurrage charges, ordinance to relax appeal time and filing of returns, personal hearing through video conferencing in April and 24X7 dedicated single-window in Icegate. In so doing, it has brought about advancement in business continuity plans by minimising disruptions in operations during this crisis”, said Mr. Ved Prakash Singh, Joint Commissioner – Customs, Central Excise and GST, Government of India at the eight-in-series webinar on ‘Supporting Exporters Sail through COVID-19’ organised by MVIRDC World Trade Center Mumbai on May 20, 2020.

Mr.Sambhaji Chavan, Joint Director, Directorate General of Foreign Trade, Mumbai said, “We are facing unprecedented challenges due to the outbreak of COVID-19, with limited movement of people and goods. In order to aid EXIM trade during these difficult times, we have issued over 3,000 MEIS scrips, 700 RoSTL scrips and 400 advance authorisations, despite the lockdown. The continuation of Foreign Trade Policy has been extended until March 31, 2021. Further, several policy measures have been taken to support exporters during COVID-19 crisis and several deadlines have been relaxed.

Mr. Abhijeet Angane, Senior Vice President & Relationship Head – West, India Factoring & Finance Solutions – FIM Bank Group while introducing his firm’s activities said, “We provide non-recourse factoring services to exporters unlike finance being offered by banks. Factoring services involves receivables assigned or purchased, limits are off balance sheet, receivables get converted into cash, factoring limit is based on future sales, client’s performance of goods and debtor’s creditworthiness, provides for collection services, no penalty on overdues and based on buyer-concentration approach. Whereas in bank finances, receivables are hypothecated, bank limit reflect on balance sheet as loan, finance is secured, receivable remain as debtors, bank limit is considered as per balance sheet and client’s creditworthiness, no collection services provided penalty interest levied on overdues and process based on client-concentration approach. Cost of factoring may be higher than the cost of traditional bank finance by 1.0-1.5 percent, however, benefits of factoring far outweigh costs. In India approximately 95 per cent of export finance is still in the traditional manner making it prone to fraud.”

Mr. Angane provided a brief on the trend of global trade as a result of the pandemic providing three distinct scenarios. In a v-shaped recovery scenario, global trade could be as high as USD 18.1 trillion, with three-six months of downturn leading to a fall of upto 11 percent, however, the recovery could reach upto around 27 percent in 2028. In a U-shaped scenario, global trade can reach a level of 21 per cent in 2020 and fall to 18 per cent by 2024, witnessing a six-nine month of downturn. In an L- shape scenario which is the worst possible type global trade, resulting in permanent loss in an economy, global trade could reach a level of 30 per cent in 2020 with a 12- month economic downturn and then rise to 15 per cent in 2028.

Mr. Anand Singh, Deputy General Manager, Western Regional Office, ECGC Ltd said, “We are providing insurance risk coverage at every stage of the export process, thereby ensuring level-playing field to our exporters during COVID-19. The risks covered are delays in LC open delivery transaction goods, insolvency of buyer, nonpayment by due date, delivery without payment and credit risk payment. It is highly recommended that exporters report overdues on a timely basis which is 360 days from due date. We have maintained a list of more than four lakh non-payment buyers globally, which will help us in recovery of debt. Country risk rating is updated on a quarterly basis, besides, undertaking economic and political risk rating. We also look into forecasting as well, ensuring that our Indian exporters do not face any hurdles. However, we do not cover risks arising out of negligence of exporters in honouring contract obligations.”

Quoting WTO forecast on world trade, Mr. Singh said, “Merchandise exports in 2020 has fallen to 30 – 32 percent which is likely to affect value chain links, thereby impacting services trade. Macro-level risks are more volatile as compared to micro- level risks. Trade barriers will increase, while alternate markets will open up, bringing in a whole host of insurance risks such as exchange risks, payment risks, credit insurance, etc. This will largely impact India’s traditional exports.

Earlier, Captain Somesh Batra, Vice Chairman, MVIRDC World Trade Center Mumbai in his welcome address said, “The pandemic has affected trade and economic activities across many parts of the world. While Indian exporters are struggling to meet their deliveries in time due to non-operation and lack of personnel during the lockdown, as also logistic and transportation hurdles, they are also facing the challenge of non-fulfilment of contractual obligations by importers. This can severely impair the commercial competence and cash flows of our exporters and result in bad debts and NPAs. Trade is important for the smooth functioning of the economy. Banks, customs, shipping companies, importers and exporters are all frontline warriors in the fight against COVID-19.”

Captain Somesh Batra, Vice Chairman, MVIRDC World Trade Center Mumbai proposed the vote of thanks.

The webinar was well attended by more than 300 representatives and exporters from trade and industry.