Govt Sitting on .2,000cr Export Refund Since Jan 

Holding back duty refunds a move to shore up revenues,alleges head of top export body 

The government has not paid back around.2000 crores to exporting firms since January under an incentive scheme,claim irate exporters,accusing the tax authorities of going slow on refunds in their desperation to meet the fiscal deficit target.The government has withheld duty drawback refunds across sectors for the past 45 days to shore up its revenues for the fiscal, said Ajay Sahai,director general and CEO,Federation of Indian Export Organization.The commerce ministry and Directorate General of Foreign Trade have written to the revenue department in the ministry of finance to urgently address the issue,a government official told ET.The duty drawback scheme refers to the refund of taxes imposed on inputs used to manufacture goods that are subsequently exported.The objective of the scheme is to ensure that local levies do not make goods manufactured in India uncompetitive in the international markets.Speedy refunds ensure that the money of the exporter is not locked up for a long time,thereby making it easier for him for to manage his cash flows and working capital requirements.Indias cumulative exports for the 11 months of the current fiscal declined by 4 % to $265.95 billion and are nowhere near the $360 billion target that was set for the fiscal.The government is expected to announce some sops to boost exports,which form a key part of its strategy to rein in the current account deficit,in the next months foreign trade policy.But for now,controlling the fiscal deficit appears to have taken precedence over exports and current account deficit.The government is under tremendous pressure to stick to revised 5.2% fiscal deficit target as any slippage here could have a negative impact on the countrys sovereign debt rating.Several measures taken by the tax authorities such as raising demands on multinational companies on transfer pricing issues as well as frequent warnings issued to taxpayers are also seen as part of a strategy to muster higher tax collections and lower fiscal deficit.Fiscal consolidation has been at the top of P Chidambarams agenda since he took over as finance minister last year.He had promised to keep the fiscal deficit at 5.3% of GDP against private forecasts of near 6%.The revised estimates peg fiscal deficit for the year at 5.2%,just a tad over the 5.1% estimated in the budget. Chidambaram has said the fiscal deficit could be lower when final numbers come in.A tax official admitted that refunds were being held back but added that this was usual towards the end of the financial year.But exporters say that in a year that exports were plunging,the government should have been more proactive.Sectors with high working capital requirements such as textiles,engineering and pharmaceuticals are particularly feeling the pinch because of the delay in refunds.Engineering exports require high working capital,and the finance ministry has withheld the duty drawbacks since January, said Suranjan Gupta,additional executive director,engineering export promotion council (EEPC).The amount of withheld duty drawbacks for the engineering sector stands at approximately.750 crore-. 1,000 crore.

Fiscal Deficit Biggest Target 

CONTROLLING FISCAL deficit seems to have taken precedence over exports GOVT IS under pressure to adhere to its revised 5.2% fiscal deficit target SEVERAL STEPS taken by the tax authorities such as raising demands on MNCs on transfer pricing issues as well as frequent warnings issued to taxpayers are part of a strategy to muster higher tax mopup

Economic Times, New Delhi, 19-03-2013