Delay in refund of upfront goods and service tax and input credit has adversely affected the exports by small businesses. The same has been highlighted in a study published by the Reserve Bank of India. 

As per the data reveal by RBI micro, small and medium enterprises witnessed slump in credit much before demonetization 

According to the study, micro, small and medium enterprises MSMEs) saw slowdown in credit even before demonetisation and GST implementation does not seem to have had any significant impact on credit. 

 

The findings of the staff study is significant considering that the trade deficit has widened. Numbers released last week show that merchandise exports growth eased 370 basis points (100bps = 1 percentage point) to 14.3% year-on-year in July, compared with 18% in June. On the other hand, import growth soared 930bps to 28.8% in July. MSMEs contribute nearly 40% of the shipments from India despite accounting for only 30% of gross domestic product (GDP).

 

Gems and jewellery, carpets, textile, leather, handlooms and handicrafts items are export items that are highly labour-intensive and depend heavily on cash for working capital requirements and payment towards contractual labourers, the report said. 

 

( Source: TNN)