Exporters Bleeds tremendously Further.
The latest survey of 402 companies done by the ministry has revealed that about 109,000 workers were laid off from export dependent sectors in the current fiscal up to January 15. In addition, these firms have lost Rs 6,272 crore worth of export orders in the same time frame.
It simply reveals that the government measures of reducing interest rates and other measures which resulted to a release of Rs.3,20,000 cr went in a vain It did not support as it was required due to Blessings of The Banks as they invested 70% of this corpus in Government securities. This activity is even proved by the banking quarterly performance. The banks were busy in improving their anticipated losses which might have occurred due to the process of banks getting in to complexed financial products. We are all happy to look at the impressive figures of profitability which have been generated through booking large gains in bond deals. But this time banks have shown a significant drop out in interest earnings. They have earned less on interest through Loans. In fact the entire accounts have made the focus on income on bonds rather going for the original source that is through Loans.
From the latest list of 402 units, chemical and diamond industries seem to have been the worst affected. While the chemical industry seems to have laid off the maximum number of workers, a government official, who reviewed the survey results, said, “The diamond industry seems to be the most hard hit.
Industry lobby groups have claimed huge number of job losses. For example, the textile industry claimed that more than 700,000 jobs were lost in 2008.
In October and November, exports from the country dipped 12.1% and 9.9%, respectively, as demand from key markets including the US and the EU waned in the backdrop of the economic crisis. The pains of the export segment does not end here. The government ignorance is creating such situation where the Exporters will have to commit suicide.
If RBI finishes the duty by reducing interest rates and looking whether the funds are utilized for said purpose of reducing interest rates. Recent months’ huge slump in the main export markets, the US and the EU, has already caused many large players and potential investors in this industry to put their new capacity creation plans in abeyance. Lending institutions have again turned wary of this elephantine industry which, in the last two-three years, was seen to be preparing for a dramatic turn around. Fresh orders have vanished due to the slump of US ,Europe and other emerging countries.
Reimbursement of service tax to exporters. The move follows complaints made by exporters that less than 5% of service tax refunds claimed by them have actually been honored by the finance ministry but Rejections made on flimsy grounds.
Exporters complain is that while the finance ministry had allowed service tax reimbursement on paper, very little was actually being refunded as the rules for making claims remained ambiguous and unrealistic . The finance ministry, till now, has allowed exporters to claim refunds on 19 services. It also recently amended a rule which prevented exporters claiming duty drawback (refund of taxes on inputs) from claiming service tax refund. But 26 cases were filed for drawback of which only one actually got refunds and that too was restricted to 40% of the claim amount filed for.
If the refunds of taxes are made then it will provide a relief to the reeling exporters where job losses are mounting like any thing.
The procedure for filing for refunds is unclear as there is lack of clarity about where to claim refunds in case a company had a factory located at one place and branch offices located at another so due to these reasons the refunds are rejected.One has to understand that service is a non-tangible and cannot be treated like goods. As rupee could still strengthen against the dollar in the medium term, only a more robust cost structure would give Indian textile manufactures sufficient cushion. Since the stakes involved are enormous, the government must accord high priority to devising suitable policies to enable the industry to cut costs
The government is only busy to achieve the export target. But what target the Exporters will achieve in 2009-10.
The ministry is likely to take a call on revising the export target of $200 billion for the year 2008-09, once the December data are released. “Most likely, the target will be set in the range of $170-175 billion.