As we have seen the Volatile Exports especially Automotive Spare Parts exports in 2019. Auto Insider reached out to Dr. Parmeet Singh Chadha, C.E.O, World Exports (India), in New Delhi for knowing what had been the Impact of GST On Export of Automotive Spare parts & Exporters in the past and what could be in the future on the Export of Automotive Spare parts.
Dr. Parmeet Singh Chadha shared his views in an Exclusive Interview by Auto Insider’s Editor-In-Chief Mr. Ravdeep Singh.
About the Company
How many years has WORLD EXPORTS (INDIA) been into business? And how many employees are working as of now?
World Exports (India) is a 25-Year-Old Export House engaged in Exports of Automotive Spare Parts around the World. It is a Part of 45 Year Old TIGER GROUP One of the First & Oldest Exporter of Spare from India. It is engaged in Spares of Automotive, Tractor & Trailer Parts. With Brand Moniker “A2Z SPARE PARTS”. We cater to anything in spare parts. We are a Merchant Trader Exporter with Combined Turnover of US$ 1 Million US$.
Now we are Team Of 20 + Dedicated workforce on a mission to leave a footprint on the world Automotive Spare Parts Sector.
What makes WORLD EXPORTS (INDIA) unique from the other competitive companies?
We have a competitive edge over our competitors because of Experience, Variety of Products we deal in and Monopoly of Products due to Own In-House Moulds Control. We, being a family run Business have least Overheads and Zero Loop-Holes.
What are the expansion plans of WORLD EXPORTS (INDIA) in the near future?
The expansion is put on hold due to the hard policies of the Government and major focus is on the sustainability of export order.
Who is Dr.Parmeet Singh Chadha?
PARMEET SINGH CHADHA is a dynamic Delhi based businessman & C.E.O of Tiger World Group. He has been into the arena of Exports of Automotive Spare Parts for the past 24 years. An enthusiastic entrepreneur and an investor in real estate business, his journey of life is not limited to the attainment of just materialistic pursuits. He is a well known Business Motivator & Leader, a Mentor, a Socialite, a Philanthropist, and quite a renowned personality. By passion, he is also a traveler, writer & author. It doesn’t end here!!! He also holds some eminent positions across various forums. He is the charismatic President (Delhi) of Young Sikh Progressive Forum which has been relentlessly working for the benefit of Sikh Youth; He is an active member of various other Sikh Organisations. He also holds the designation of Advisor (SIKH ADVISORY COMMITTEE ) to Delhi Minorities Commission, Delhi Govt.
He is also the Executive Member, Gurudwara Satsang Nanak Darbar (Shah Ji), Lajpat Nagar and Executive Member, R.W.A Lajpat Nagar-3. Last but not the least, he has to his credit the Chairmanship of ‘World Sikh One’ which is working with the sole aim of societal edification of Sikh community and Values Pan India & across the globe. He constantly draws inspiration for all his endeavors from his Parents, beautiful wife & two pretty daughters.
How many years have you been in business? And how many team members are working as of now?
We are going to complete 25 years of my entrepreneurial journey which started in 1995. My Family Business is Running 45 years strong. We’ve got a team of 95 dedicated & loyal staff Members and Managers
What are your key highs and key lows?
Life and business are like ECG Machine and always moving up and Down. There were many ups and Down in my Lifes also but as I am a Futuristic person I ignore them and move ahead.
What motivates and inspires you the most?
There are many who have given me inspiration or from whom I learned a lot. Firstly my Parents & Family, My Friends, Mentors and mostly the Critics who kept me going ahead. I will not name anyone as it would not do justice to others.
What is your suggestion for the new-age entrepreneurs who are just starting their business may be in your trade or different trade
My advice to them would be to Work Hard, Think Big, Start Small, Keep Going.
Learn from your mistakes, Make a Goal and make it happen, every business has a Boom life of 10 Years, look for it and Make it happen. Keep learning new Skills & Challenge yourself Daily.
What are your expectations from 2020?
In terms of economy and the country as a whole, I’m expecting 2020 to bring a series of reforms for GST, Income Tax, Export Benefits & other policies related to export. As we’ve almost covered 2.5 years since GST has been implemented, our government has taken care of various hardships being faced by businesses and taxpayers due to various issues in the GST law itself and trying to remove those flaws by way of various circulars, notifications, etc. Apart from GST, I’m expecting the Government to move its focus towards economic stability and development rather than other political agendas.
Impact of GST On Export of Automotive Spare parts & Exporters?
We will divide our reply into two parts
Part 1. The Theoretical Factors & Laws pertaining to GST on Exports of Automotive Spare parts :
The current Indian government has the aim of increasing the output and the quality of exports from India as portrayed by the “Make in India” policy, and the many tax benefits provided to the exporters. GST rolled out on July 1 and yet there is still some ambiguity among the exporters on the possible impact of the new regime on this industry. Traders want to know how GST will affect the products exported, and the amount of tax paid on the raw material/input used. To erase this confusion, the Indian government has shared a set of notifications and guidance notes for the public on 28th June 2017 regarding the applicability of CGST, SGST, UTGST and cess, and GST rates.
With GST in place, the export industry in India would be able to have internationally competitive prices due to the smooth process of claiming input tax credit and the availability of input tax credit on services.
Part 2: The Actual Status and Condition of Exporters & Impact of GST On Export of Automotive Spare parts :
How do you see the Current Status of the Indian Economy on the whole & Export of Automotive Spare parts?
Well, going by the numbers, GDP continued its downward trend for the 7th consecutive quarter falling to 4.5% in the second quarter of the year 2019-20, having an incremental fall of 0.5% compared to the last quarter of the year. The current government policies have created havoc for exporters especially the Automotive Spare parts sector.
GST Vs Forms :
Earlier the Export was very easy and simple to do. The exporter was invoiced by manufacturer, Factory or other suppliers against FORM H without any tax and after the Closing of Financial year, exporter used to get Form H issued from the Sales tax office and provides the Suppliers. So the Sales tax was not a burden but Nowadays The suppliers charge 28% GST to exporters which is refunded back by the GST Department but it is usually delayed by 3-6 Months. It causes a lot of paperwork and capital of exporter is stuck with the departments
Before GST only Forms were given against the Tax and so no refunds were there but after GST the Huge Refunds are held up with the governments.
Before the GST regime exporters were flourishing as those availed purchases which were tax-free and had enough capital for rotation of funds.
After the GST Regime exporters were subject to GST and had to make purchases with GST and apply for a refund after shipment is made. Automotive Parts exporters faced a heavy burden of 28% GST, which destroyed the export market. Our sole competitor is china and they get huge benefits from governments and relaxed taxation is levied to their exporters, so we lost to china competitors and business got a drastic decline of more than 60%. Moreover, the capital was stuck with the government in the form of refunds which are usually delayed by 6-9 Months. Citing an example if an exporter had a turnover of 5 Cr, he has to block his 28% I,e, appx 1.40 Cr in refunds and now he is able to do business with 3.60 Cr of capital Only.
The capital involvement is huge due to the GST tax amount of 28%, so the capital is reduced by 28% as this is to be always held up with the Government departments
Documentation & Paper Work
Earlier the paperwork was simplified and easy but now Post GST regime too much paperwork and burden on exporters. Exporters lose focus due to too many policies and forms. Also, government websites are also slow to load.
Government Departments &surveys & raids checking
Earlier the Government departments involvement was minimal and restricted to sales tax only and not many surveys and Tax raids were done but now Post GST multiple departments are there like IGST, SGST, CGST, CUSTOMS, etc and too many Un-necessary Surveys and Raids are done by the departments
Earlier the exporters were given handsome export benefits like Drawback, DEPB, FOCUS, etc and were easy to get But now the benefits are reduced to the lowest levels and are difficult to get.
Trouble in ports in the clearance of the shipment
Earlier the clearance of shipment at the ports was easily done without any trouble from departments but now the clearance is slow and maximum examination is done and causes loss of time and goods
Small scale manufacturer’s erosion so cost escalated
Earlier the small trader exporters used to buy goods from market and export in their name and make a living but after GST all the Small timers have run away due to the increase in the cost of accounting and paperwork.
What do you expect from the Government in respect to the Automotive Export Industry?
- The government must reduce the GST from 28% to 18%.
- The government must start the form system as earlier and make export purchases tax free.
- The paperwork and red tapeism must be reduced.
- The customs must clear the goods with least examination and time
- The Export benefits must be increased so as to increase the exports
- The surveys & raids must be minimized
- The exporters are lifeline to country’s economy and government must support exporters to increase foreign exchange.