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Exporters say cash flows hit on pending duty drawback, VAT claims
December, 17th 2013

Exporters have alleged that pending claims seeking refund of input taxes and value added tax (VAT) worth several thousand crores was affecting fund flows and could hurt growth prospects.

Over Rs 4,800 crore worth duty drawback claims are pending with 103 ports across the country while VAT dues in just two states — West Bengal and Tamil Nadu — amount to over Rs 1,500 crore, the Federation of Indian Export Organisations (FIEO) has said.

“This is seriously affecting fund flows and many (exporters) are not in a position to execute the orders that they are getting. If this continues, the high growth of 18 per cent that we were hoping to notch in the last quarter, could get dented,” FIEO President Rafeeque Ahmed said.

Drawback claims pending with the Jawaharlal Nehru Port Trust alone are around Rs 1,593 crore while in Chennai it is to the tune of Rs 802 crore.

“Customs officials do not want to give us our due as they say that it would affect their revenue targets for the fiscal. Earlier, they would go slow on claims (only) in February, but this year they have not been honouring claims for the past two months,” Ahmed added.

Fear of NPAs

FIEO is receiving submissions from a number of its members, especially those in the small and medium sectors, that their accounts stood the risk of being categorised as non-performing assets by banks.

“Something needs to be done fast by the Government, especially since cost of credit for exporters is high and availability is low,” the FIEO President said.


As per FIEO’s forecast, the year ahead would be better than 2013, but the global situation remains fluid. The major challenge, though, lies at home where manufacturing is continuing to suffer.

“I would like to reiterate that exports cannot be sustained even on medium term basis unless manufacturing backs exports. There is need to push manufacturing by augmenting investment in the sector, both for modernisation and expansion,” Ahmed said.

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