Exporters Seek Exemption from 45-Day Payment Rule to MSMEs
Indian exporters, represented by 15 export promotion councils, including the Federation of Indian Export Organisations, are urging for an exemption from a new rule mandating payment to micro and small enterprises (MSMEs) within 45 days.
Around 150,000 exporters have raised concerns, stating that the provision will impact their liquidity, considering exports payments often have an average lag of 120 days.
The rule, Section 43B(h) of the Income Tax Act, aims to address delayed payments to UDYAM-registered micro and small entities, but exporters are seeking an extension to 120 days.
Exporters argue that the move could affect their competitiveness internationally, and they stress the need for a level playing field compared to other countries where credit terms are more generous.
Industry representatives highlight challenges, including increased cash flow difficulties amidst geopolitical uncertainties, and propose exempting supplies from MSMEs to exporters from this provision.
While acknowledging the importance of timely payments, exporters advocate for a phased reduction in time to address concerns from both sides.
The handicrafts industry, facing credit periods of 180 days, finds the 45-day payment rule particularly challenging, given the extended timeframes involved in export shipments and payment realization.
Overall, exporters seek exemptions to help them adjust to the new provision and maintain competitiveness in the global market.
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