The Indian government will be waiving compound interest (interest on interest) charged on loans of up to Rs 2 crores for a six-month moratorium period (March-August), announced due to the COVID-19 pandemic. The lenders will issue a scheme by November 15 to complete the waiver. The news comes as a huge relief for small and medium businesses.
In other news, India’s export sector has finally reported some actual signs of revival. According to the Ministry of Commerce’s recently released preliminary data, merchandise exports have reported a 5.3% growth to $27.4 billion in September. The uptick was led by sectors such as engineering, petroleum, pharmaceuticals and readymade garments. Imports contracted by 40.1% to $148.7 billion and India reported a total trade deficit of $23.6 billion.
Trade Update
11TH OCTOBER
# 88
The government’s decision to cap benefits under a key scheme at just Rs 2 crore per exporter during the September-December period of this fiscal will likely hit the pharma and auto industries hard, as some of the large companies in these sectors have generally been among the biggest beneficiaries, raking in export benefits of hundreds of crores of rupees each.
Exports of cotton yarn, fabrics, madeups, handloom products etc from India showed a positive growth of 14.82 per cent in September 2020 compared to September 2019, according to the provisional data on merchandise trade released by the ministry of commerce and industry. Exports of readymade garments of all textiles also rose 10.21 per cent during the month. In September 2020, India’s merchandise exports were $27.40 billion, as compared to $26.02 billion in September 2019, showing a positive growth of 5.27 per cent. However, exports during April-September 2020-21 were $125.06 billion, exhibiting a negative growth of 21.43 per cent over the same period last year.
In a relief to individual borrowers and medium and small industries, the Centre has agreed in the Supreme Court to waive compound interest (interest on interest) charged on loans of up to Rs 2 crores for a six-month moratorium period announced due to the COVID-19 pandemic. It said the government will seek due authorisation from parliament for making appropriate grants in this regard and the endeavour shall be over and above the support of Rs 3.7 lakh crore to MSMEs, Rs 70,000 crore for home loans etc. already extended through the Garib Kalyan and Aatma Nirbhar packages announced by government earlier.
Pre-filled tax forms and greater transparency requirements are coming to businesses in 2021, with the Goods and Services Tax (GST) Council clearing key changes to the return filing process on Monday. Monthly GST returns of businesses giving summary of all transactions in the GSTR 3B form will be automatically populated from the details given in the sales returns of the company, as well as its suppliers filed earlier in the month in form GSTR 1. This will take effect on 1 January 2021. For small businesses, which file returns on a quarterly basis, it will take effect on 1 April.
Non-availability of containers for the export sector is causing a concern for meeting delivery commitments of foreign buyers, apex exporters' body FIEO said on Wednesday. Federation of Indian Export Organisations (FIEO) President Sharad Kumar Saraf said that from the past couple of months, in spite of offering space for three to four weeks ahead, shipping lines are shutting out the containers abruptly giving reasons that the vessels are full.
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