GST refunds still an issue for leather exporters
Though liquidity crunch is easing for leather exporters, GST refunds continue to be a challenge for some, even nine months after its implementation. Lack of clarity
and inability to afford professionals, especially by smaller players, is a major issue. Ajay Sahai, Director General and Chief Executive Officer, Federation of Indian
Export Organisations, said that for small and medium companies, a substantial portion of the refunds is locked in GST and they continue to face liquidity crunch.
Unlike the bigger players, who have access to the domestic market, these companies solely depend on exports. Siddiq Ahmed, who handles finance for a small shoe
manufacturer, agrees. Though refunds have started coming in, they are still suffering from liquidity crunch. The company does business worth Rs. 3 crore annually,
which requires a working capital of Rs. 1.5 crore.
“Earlier close to Rs. 70 lakh were stuck in refunds,” he added. Though the initial liquidity crunch has eased, they still have a hard time catering to the order
of 35,000 pairs of shoes. With not many banks willing to come forward to give them loans, they now find themselves in a tight spot.
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