Karnataka’s MSME exporters have sought a temporary freight subsidy from the Centre to cushion the pain of sharp increase in shipping costs.

Karnataka’s small and medium scale exporters have sought a temporary freight subsidy from the Centre to cushion the pain of what they complain as a sharp increase in shipping costs due to continued shortage of containers.

Fresh Covid-19 restrictions in a few countries on fears of another wave of the pandemic have only prolonged the problem in spite of some recent respite. “The situation is still challenging. We are trying to manage in coordination with our customers through multiple forwarders. The cost per container still hovers around three-and-a-half times the pre-Covid levels,” said Siva Ganapathi, managing director of apparel exporter Gokaldas Exports.

“Because of the recent Covid-19 restrictions in certain countries in Asia, import is impacted. There is a delay of two weeks in transit/ clearance,” he added.

Industry body Kassia is pressing for relief to both exporters and importers arguing that even the latter have not been able to pass on the costs.

The supply chain has been disrupted. Small scale units have not been able to get material from outside, said R Raju, managing director at Vengree Metal Punch, a Bengaluru-based exporter of sheet metal components & server racks.

According to Kassia administrator P Shashidhar, the problem has become acute as some Chinese ports have either shut themselves or have scaled down operations.

If the government does not intervene, a large number of medium and small-scale exports will go out of business, said industry insiders.

Some countries including the US, Kassia added, have responded with measures like opening up their ports round-the-clock to keep businesses afloat. Exporters have urged the Centre that unless there is an appropriate response, Indian businessmen would lose out in the global trade ahead of the holiday season orders in the West.

The issue figured at the recent stakeholder consultation at the ministry of commerce & industry (MoCI). One of the suggestions was creation of policy sops that discourage export of empty containers.

As per the current structure, keeping containers beyond a period of six months attracts an import duty as deemed import. While the policy is designed to discourage long dwell time of containers and to promote faster turnaround, some stakeholders pointed out that this practice has sometimes created a perverse incentive among shipping lines to export empty containers to evade duty payment on containers which are lying empty.

The government has responded to this problem as well, but the container crisis continues, they added.

Source : Economic Times