A representative of Haq Brothers from Moradabad - a
company that is more than 40 years old and deals with
brass, candle lamps among others says, "I filed for my
GST refund back in July. I was under the impression that
the government will refund me the money within two
weeks, but I have not received a penny yet. I am
considerably well off, I must admit that, but where do
my employees and labourers go if after a point I am not
left with capital to operate? I know people who have Rs
500 crore trapped this way. Export has completely gone
down. Moradabad saw the factories getting shut and daily
labourers fleeing to villages after demonetisation.
After GST, it is only reaffirmed that no governmental
policy in this country that comes with a 'modern' touch
is actually helpful to the poor at all."
He suggests that in order for the government to make the
country conducive for exporters, GST needs to be
simplified immediately for exporters. He says, "No
nation in the world has become rich without exports. The
East India Company, Silk Route, Arabs, all of these
cultures flourished because their exports prospered. In
modern times, countries such as the Philippines and
Thailand are doing well because of a strong export
community. Now with the Nirav Modi scam, banks can be
expected to join the cynicism. They have our export
documents, stock insurances, collateral security,
building insurance, and yet they are making it tighter
and tougher for businessmen to get loans in India."
Exports are the second largest sector in India, after
agriculture. Finance Minister Arun Jaitley had
emphasised during his Budget announcement earlier this
year, "Our exports are expected to grow at 15% in
2017-18. We are now firmly on course to achieve high
growth of more than 8%."
However, the ground reality seems to be a very different
picture. Karan Pahwa from Surya International which was
established in 1950, says, "We export textile, metal and
glass and have a strong presence in the US market, but
unfortunately I can see that the export industry here is
bleeding at the moment. We were told that once apply for
GST refund, we will get 90% of the amount in 10 days and
the remaining 10% gradually thereafter. It has been
months and I have not received even 1% of the amount.
Hypothetically, if you turn capital four times a year
and if your GST is 25%, you are giving 100% to the
government by the end of the year. What working capital
are you left with then? More so, in a business like ours
that work on credit and earns payments later?"
Last year, the Delhi government had notified that the
minimum wages for unskilled, semi-skilled and skilled
labour were fixed around Rs 13,350, Rs 14,698 and Rs
16,182 respectively. Pahwa mentions that Delhi Chief
Minister Arvind Kejriwal's law has also affected his
business in the tough times as paying salaries to the
labourers have already become difficult for small
businesses.
"The SMEs are going to cash out this way. The whole
point of a family business, which many SMEs in the
country are, is that you do not have to depend on bank
loans at all and work on high margin models. But as
things are going, SMEs seem to be left with two options
now - go industrial or shut shop. I have never taken a
bank loan, but I am sure after the Nirav Modi scam,
banks too will lose whatever little trust they had on
SMEs," says Pahwa.
However, there is a contrarian view amidst the same.
Sweta Kanodia, Director, Kanodia Global says, "We have
not got our refund as well, but we have not faced much
problem in operating. I believe most SMEs are trapped in
issues post GST because they do not file taxes in time
and lack internal discipline in their operations."
Source::: Economic Times,
dated 26/02/2018.