The Pharmaceuticals Export Promotion Council (Pharmexcil) has sought the immediate attention of the senior officials in the union commerce ministry towards several issues concerning the exporters including CENVAT and VAT refunds, credit rating, advance authorizations, etc which need immediate solution to achieve the export targets.

In a letter to J S Deepak, joint secretary, department of commerce, Pharmexcil executive director Dr P V Appaji said that these issues are causing a lot of impediments in the targeted ambitious plan of achieving US$ 25 billion of exports by pharma industry. Industry feels that though the policies are industry-friendly, there are many problems while implementing the same, he said.

Regarding the CENVAT issue, Dr Appaji said that the CENVAT refund claims of exporters are kept pending for long period, due to some fraudulent claims, which occur very often. Whenever such frauds occur, claims of all exporters are kept pending and refunds are allowed after scrutiny, which takes long time. Because of piling up of huge amounts for refund, genuine exporters are subjected to financial crunches.

To avoid such unwarranted difficulties, Star Exporters and exporters who do not have any cases against them may be spared from scrutiny and allow their refunds, Dr Appaji in his letter suggested.

Likewise, the claims of exporters for VAT refund are kept pending for over 5 years under the pretext that some companies, from whom material have purchased, had not paid the VAT amount. Exporters are also facing problem in getting their VAT refunds due to delays in audit and checking of documents also. In some cases, the exporters are asked to collect VAT Return Copy filed by each supplier and maintain the record for claiming the Refund. These lapses are causing lot of problems to exporters as huge amounts are blocked. He suggested that VAT refund claims of exporters may be released / cleared within 60 days from the date of filing, without penalizing them for the fault of other suppliers.

Taking up the issue of credit rating, the Pharmexcil letter said that credit rating was made compulsory for every year by RBI for those who are availing credit facility over Rs.5 crores. The agencies that accord credit rating charges huge amount and exporters are left with no choice. As a solution, it suggested that credit rating may be called for once in three years instead of every year or small exporters upto, say, Rs.20 crores may be compensated by reimbursement.

On the advance authorizations issue, Pharmexcil suggested that the exporters may be allowed to complete the export obligation up to 1000 kgs-- within 12 months from the date of import /date of bill of entry; 1000 - 5000 kgs--- within 18 months from the date of import/date of bill of entry; and over 5000 kgs---within 24 months from the date of import/date of bill of entry.

It said that the small exporters normally imports material estimating their annual orders position. Considering the 4-6 months time taken for import of raw material, it would be difficult for them to fulfill the export obligation within the present stipulated period of 12 months under advance authorizations facility.

Regarding the bank charges on pre-shipment packing credit, pharmexcil said that bank charges 1 per cent every month on pre-shipment packing credit facility on account of ECGC, even though the exporters are having buyer wise ECGC policy or whole turnover policy, for which they are paying premiums separately. This is resulting in double payment by the exporters on account of ECGC coverage.

To solve this issue, it suggested that as there is no rationale for charging additional amount of 1 per cent on account of ECGC, when their loan amount is otherwise secured, such exporters should not be burdened with additional charge of 1 per cent.