GST on freight leaves exporters in a quandary

The commerce ministry has issued an order imposing 5 per cent GST on international outbound ocean freight and 18% GST on air export freight with effect from October 1. 

KOCHI: At a time when high freight charges and global recession are posing a tough challenge, the decision of the Union government to impose GST on international outbound freight has landed the exporters in a quandary.

The commerce ministry has issued an order imposing 5% GST on international outbound ocean freight and 18% GST on air export freight with effect from October 1. The Kerala Exporters Forum has submitted a representation to Union Commerce Minister Piyush Goyal and Finance Minister Nirmala Sitharaman urging them to withdraw the GST as it will add to the burden of exporters at a time when Indian products are facing a tough challenge in the international market due to the price factor.

“The global trade is passing through a very difficult phase due to high inflation and recession which have affected the demand. India’s exports have shown a downward trend during the April-August period. Exporters of perishables including fruits and vegetables get only a moderate revenue due to the fluctuating market. At this time, the decision to impose GST has affected our liquidity,” said forum honorary secretary Munshid Ali.

He said the overseas freight charges have gone up by 250% compared to the pre-Covid rate. The payment of GST on freight charges will affect the liquidity of exporters as the interest rates have also increased with the Reserve Bank revising the repo rates. Munshid said he would meet Union minister Goyal along with Kozhikode MP M K Raghavan on October 18 to convince him about the issues faced by the exporters.

“The freight charge has hit an all-time high of $12,000 per container. Meanwhile, the seafood export sector is facing unprecedented challenge due to recession in the US and European markezs. As Ecuador is dumping their products in the US market, we are not getting export orders.

Most of the seafood exporters are holding stocks. There has been a 20%-30% drop in the marine products export market. At this time, the decision to impose GST has come as a big setback,” said Seafood Exporters Association of India Kerala region president Alex K Ninan.

- The New Indian Express