MSMEs are dying for a supportive DGFT Office
Updated: Jun 22, 2015 12:18:33pm
New Delhi, June 22 (KNN) MSMEs are the most vibrant exporters from India. With a share of nearly 50 per cent of the total exports from India, this sector play a pivotal role in export of Gems and Jewellery, Garments, Leather and leather Goods, Handicrafts, Engineering Goods – the sectors crucial for upscaling India exports.
However, the sector is treated most lackadaisically by the office of Director General Foreign Trade (DGFT). Instead of addressing the impediments suffered by the cash starved MSME exporters, the labyrinth of procedures of DGFT add further woes to our small exporters.
Researches by KNN team has unearthed lots of cases where applications for reimbursements of Duty Drawbacks, Duty Exempted Imports and other basic incentives for exporters are pending with the DGFT for years together. While following the procedures (and procedures for reviewing procedures) remain utmost important for DGFT experts, many claims for small amounts or extensions dates of sanctioned incentives gather dust.
To cite an example, M/s Shashi Cables, an MSME manufacturer of Conductors and Cables, was issued an advance authorisation by DGFT for duty free import of inputs for a deemed export order in September, 2012.
Without waiting for the delay involved in import, they sourced duty paid inputs and executed the order on time. After fulfilling the deemed export obligations, they tried to source the input, basically to encash the duty exemptions allowed, based on which the costing of the export was done.
Due to reluctance of the known suppliers etc they could not utilise the Authorisation and asked for extension of validity of the Authorisation which was granted once. However, their request for 2nd extension of validity was turned down by DGFT with the pretext that there is no provision in the DGFT procedures for a second extension of validation.
The real malady of the entire system is continuation of the ‘one size fit all’ legacy in the DGFT. While formulating the procedures, DGFT has not cared for identifying the characteristic bottlenecks faced by an MSME, for example, in importing inputs. Their requirements are small, so no global supplier is interested to supply, funds are limited, so they cannot open a letter of credit and wait and as the consignment is small, the logistics is too lengthy. Under these circumstances how a License validity limit set for a large exporter is applicable for a small firm? The office of DGFT needs to consider sympathetically.
The MSMEs are well aware of the adverse business environment and accordingly try to pre-empt the process, in this case the exporter fulfilled his obligation first without waiting for the Duty benefits. The only favour requested was longer duration for availing the import duty exemption benefits. It is only a question of modifying the Procedures without any revenue loss to the Government.
A delegation from Federation of Indian Micro and Small & Medium Enterprises (FISME) recently met a DGFT official, Pravir Kumar, where the above and many such problems faced by the small exporters were raised.
Let us hope this will lead to some tweaking of the DGFT Red Tapes to facilitate exports by MSMEs, the ones who can reverse the current downward slide of the country’s foreign trade. (KNN Bureau)
However, the sector is treated most lackadaisically by the office of Director General Foreign Trade (DGFT). Instead of addressing the impediments suffered by the cash starved MSME exporters, the labyrinth of procedures of DGFT add further woes to our small exporters.
Researches by KNN team has unearthed lots of cases where applications for reimbursements of Duty Drawbacks, Duty Exempted Imports and other basic incentives for exporters are pending with the DGFT for years together. While following the procedures (and procedures for reviewing procedures) remain utmost important for DGFT experts, many claims for small amounts or extensions dates of sanctioned incentives gather dust.
To cite an example, M/s Shashi Cables, an MSME manufacturer of Conductors and Cables, was issued an advance authorisation by DGFT for duty free import of inputs for a deemed export order in September, 2012.
Without waiting for the delay involved in import, they sourced duty paid inputs and executed the order on time. After fulfilling the deemed export obligations, they tried to source the input, basically to encash the duty exemptions allowed, based on which the costing of the export was done.
Due to reluctance of the known suppliers etc they could not utilise the Authorisation and asked for extension of validity of the Authorisation which was granted once. However, their request for 2nd extension of validity was turned down by DGFT with the pretext that there is no provision in the DGFT procedures for a second extension of validation.
The real malady of the entire system is continuation of the ‘one size fit all’ legacy in the DGFT. While formulating the procedures, DGFT has not cared for identifying the characteristic bottlenecks faced by an MSME, for example, in importing inputs. Their requirements are small, so no global supplier is interested to supply, funds are limited, so they cannot open a letter of credit and wait and as the consignment is small, the logistics is too lengthy. Under these circumstances how a License validity limit set for a large exporter is applicable for a small firm? The office of DGFT needs to consider sympathetically.
The MSMEs are well aware of the adverse business environment and accordingly try to pre-empt the process, in this case the exporter fulfilled his obligation first without waiting for the Duty benefits. The only favour requested was longer duration for availing the import duty exemption benefits. It is only a question of modifying the Procedures without any revenue loss to the Government.
A delegation from Federation of Indian Micro and Small & Medium Enterprises (FISME) recently met a DGFT official, Pravir Kumar, where the above and many such problems faced by the small exporters were raised.
Let us hope this will lead to some tweaking of the DGFT Red Tapes to facilitate exports by MSMEs, the ones who can reverse the current downward slide of the country’s foreign trade. (KNN Bureau)
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