Multiple adverse factors rooted on GST launch has caused the country’s trade situation to worsen as the October 2017 data shows export decline of 1.1%. According to the Commerce Ministry data for October, exports fell to $23.1 billion while imports recorded its 10 months slowest increase of 7.6% to $37.1 billion.
The net result is a trade deficit of $14 billion which is the highest one since mid-2014.
Poor trade performance is attributed to the GST induced liquidity crunch induced on SMEs and other small players. Various trade bodies are criticizing the premature and hasty GST launch to affect the country’s ailing trade sector.
Exporters are blaming on the delayed refund of input tax credit allowed for them. The cash constrained sector dominated by SMEs could not afford money blocked in government accounts for a long time.
The GST Council has made a belated attempt to reverse some of the facilities to exporters. It has allowed duty-free sourcing of materials for export production until March 2018. It also decided to create an e-wallet for input tax credits for exporters though it will be effective from mid-2018 only.