Exports should post better results in the months to come
Exports should post better results in the months to comeNew Delhi, Aug 2 (KNN) In the wake of allegations over traders massively mispricing goods to stash away dollars overseas to benefit from the depreciating rupee, Director General and CEO, FIEO, Ajay Sahai expressed his views on the subject.
1. What is your take on the issue?
Barring exceptions, I don’t think any exporter would do under invoicing of exports particularly at a time when currency is depreciating giving sizable profit to the exporters. Besides, realization of exports, export benefits are also ad-valorem in most of the cases and thus, exporter would lose the export benefit as well for under invoicing of exports, if any. I do not see any incentive for under invoicing of exports in the current situation.
2. How can the matter be addressed?
Most of the exports are already under export promotion benefit schemes covering over 95 per cent of shipments which are assessed by customs for their valuation. Moreover, after passing of Export Valuation Rules in India, customs authorities can value even those exports which are not under any exports benefit scheme. Therefore, adequate safeguards already exist in the system to check over or under valuation.
3. What measure should be taken to stop trade mispricing, as it is difficult to verify each transaction and its value?
As stated earlier, such malpractices can be done only by a fraction of unscrupulous exporters; we need to come heavily on them so that a proper message is sent to one and all. Customs is aware of prices of most of the products as they have a “Valuation Directorate” to provide information on value of traded products. The information by the Valuation Directorate should be passed on to all field functionaries of the customs with the direction to be a little vigilant in the matter.
4. India's exports dropped 1.4 per cent in the April-June quarter. Exports were down 4.6 per cent in June even when rupee has slid nearly 10 per cent against the dollar over this period. Please comment on the issue.
Rupee depreciation has definitely added to competitiveness to exports but we could not en-cash on it due to slackness in global demand. Moreover, many currencies have also depreciated against dollar giving lesser advantage to the Indian rupee. Coupled with it is the fact that import intensity of exports has increased in the last 10 years or so which is taking a hit with depreciation of rupee. The value of domestic inputs has also increased due to inflation and therefore, the net competitiveness has not increased to the extent everyone thinks. However, the global situation is improving and we are hopeful exports will post better results in months to come. (KNN/SD)