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Exports from Pasakha industries come to a halt after GST

The failure of custom officials in Jaigaon to move to online taxation system has impacted exports from Phuentsholing

Bhutanese consignments stranded at Jaigaon after the border town customs office fail to move to online taxation system post-GST

After the Goods and Services Tax (GST) became effective in India on July 8, industries in Pasakha near Phuentsholing have not been able to export anything so far.
This, according to industrialists, is because the land customs office located in Jaigaon is not yet ready to implement the online GST system. The office and checkpoint are struggling with lack of facilities such as good internet speed required to implement the new taxation system.
GST needs a well-connected system in order to generate the results of the GST and IGST payments. Currently, Jaigaon land customs office is run by only two Superintendants and inspectors each.
Another reason why consignments are stagnating is Indian suppliers’ apprehension that they might not be refunded for tax imposed under the new taxation system.
Bhutan Ferro Alloys Limited (BFAL), the country’s highest ferrosilicon exporter has not sent a single consignment till now. Two truckloads of Ferrosilicon belonging to BFAL are still stranded in Jaigaon without a clue as to when these trucks will move.
“They have not moved till now,” said Senior General Manager (Purchase) of BFAL, Nakphay Wangchuk.
Also, five truckloads of products from Bhutan Carbide and Chemicals Limited (BCCL) are stranded in Jaigaon. Few remain at the plant in Pasakha. The suppliers are unwilling to order supplies from the industries since they are still confused with how GST will impact Bhutan. “Temporarily, they are hesitant to place orders,” he said.
The go downs are cramped with finished goods waiting to be exported. Unless these are disposed, revenue is at stake for the industries.
Some industries have not received supply orders from mid-June because of the fear of GST impact. Observers said that in fact, suppliers should have been smart enough to order from Bhutan before July 1 as then, GST would have had mimimum impact but the opposite happened.
BCCL has not sent any consignments since June 25 otherwise the company used to export up to six truckloads daily. Halt in exports has affected some industries. The prolonged export blockade could also lead to loss of customer base.
An economist on condition of anonymity said: “With this simple bottleneck, industries cannot close the factories as thousands are employed.”
Several industrialists said that the land customs office in Jaigaon, which deals with international trade needs to be well equipped with machineries and manpower preinstalled.
Druk Ferro Alloys Limited (DFAL) has also not sent a single consignment so far. Druk Ferro produces up to 40 MT of Ferrosilicon a day and exports 33 MT a day. DFAL has not received a single supply order for some time now.
“The companies cannot pay for the raw materials and now they will be unable to pay back loans,” said DFAL’s Dhari Saha Giri.
Meanwhile, the land customs office in Jaigoan has suggested that suppliers file tax manually without using the new system until it is fully installed.
“We don’t want hassles to free trade between the two countries and have suggested the suppliers to comply manually but they are unwilling,” said Assistant Commissioner of Land Customs Division of Dinhata, S. Chatterjee.
However, Indian suppliers are demanding that GST system be fixed immediately since the system has blocked consignments from reaching their destinations. “We want the customs to fix the system immediately and let us start supplying. We will not go for manual entry system even if it’s temporary,” said President of Jaigaon Transporters Welfare Association, S.P. Shrivastav.

These suppliers fear they will not receive refunds of the paid tax if filed manually.
Secretary General of the Association Naveen Sharma said they are still not clear about the new tax system and its returns.
“If we file tax manually, there is the question of clearing bills even if the consignment reaches the destination,” said Naveen Sharma adding that suppliers are unwilling to order until the whole system is in proper place.
Even if this temporary glitch is resolved, Bhutanese industries are expected to face challenges to find a market within India. The imposition of GST will gradually force Bhutanese exporters to increase prices causing them to lose out to cheaper Indian products. Almost 90% of Bhutanese goods are exported to India.

Krishna Ghalley from Phuentsholing