24.11.2022: GST on freight: Kerala agri exporters threaten to stop shipments

The ongoing FIFA World Cup in Qatar seems to have not deterred Kerala fruits and vegetable exporters to go ahead with their decision to suspend exports from Thursday midnight. 

A decision to this effect was taken in Kozhikode in protest against the ”exorbitant hike” in freight charges and the newly -implemented 18 per cent GST on exports from October.

Asked whether the stoppage of exports will impact their business commitments during the FIFA World Cup season, M Abdulrahiman, general secretary of Calicut Exporters Association told  businessline that “there will be some impact for breaching the export orders especially to Qatar. But our overall loss is much above that due to the increase in taxes.”

Losing competitive edge 

He said traders abroad have expressed their inability to procure these produce at high rates and informed that they will not be able to pass on the additional GST charges to customers there. This would make Indian agri-commodities incompetitive, thereby benefiting competing countries such as Sri Lanka, the Philippines, Thailand, Indonesia, Pakistan.

Another exporter KB Rafeeq, proprietor of Kozhikode-based KB Exports, said, “There is no other option but to stand united for a common cause of the entire fraternity in spite of the business generated from Qatar. Today, survival is the biggest challenge and it is difficult to move ahead with the current rate structure”. 

Abdulrahiman said that an exporter, who ships five tonnes per day, has to pay GST of ₹25 lakh a month. Flight charges for the cargo were in the range of ₹35-50 per kg before Covid and it went up to ₹100 in the pandemic times in the absence of passengers. Even after normalcy was restored in flight operations, these charges are still continuing. Coupled with this is the 18 per cent GST, he said. 

The Association has given several representations to the Finance Minister, Nirmala Sitharaman and airline companies, but nothing has happened. 

Kerala ships around 200 tonnes of fresh fruits and vegetables from the four airports on a daily basis catering to Gulf markets, Europe and the Far-East. 

Munshid Ali, Secretary of Kerala Exporters Forum, attributed the two per cent drop in the overall merchandise exports in the country this year to the prevailing high GST structure and freight rates. 

Dil Koshy, secretary, Agricultural Products & Processed Food Exporters Association, said the re-imposition of 18 per cent GST on air freight and 5 per cent on seaways would lead to a working capital shortage. The government will not be getting any monetary benefits out of GST collections, but can only hold the funds for some time before reimbursing them fully to exporters. Moreover, there will be an inordinate delay in getting refunds.

Source: The Hindu Business Line 

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