The Kerala Exporters’ Forum has asked the Central government to immediately constitute a regulatory authority to control export freight charges that have escalated due to the Red Sea crisis.
In a memorandum submitted to Union Minister for Commerce Piyush Goyal and Union Minister for Ports, Shipping and Waterways Sarbananda Sonowal, besides Finance Minister Nirmala Seetharaman recently, the forum sought an extension of GST exemption on export freight charges.
“Shipping companies are charging us at least five times more than normal, citing extra time and expense for each journey as they are no longer able to access the Red Sea and the Suez Canal for freight movement to Europe and the US. Going around the Cape of Good Hope is 30% more expensive than normal transport. They call it ‘war compensation’,” forum president K.M. Hamid Ali said. The forum demanded that the Centre come up with a regulation so that shipping companies shall not change the tariff as they pleased.
The demand for a regulatory authority comes in the wake of the fluctuating flight fares to West Asia, especially during the festival season.
Freight movement through the Red Sea and Suez Canal became dangerous after the Houthi terrorists of Yemen started attacking ships from countries supporting Israel in the Israel-Palestine war.
Meanwhile, overseas freight charges have gone up by 300% to 350% post-pandemic, the rates are 200% to 250% more than that in 2019. Exporters claimed that payment of GST on such high rates adversely affected the liquidity of exporters, particularly since the interest rates had also gone up.
“The impact of GST on ocean freight will affect agriculture exports the most as air freight is much higher. Hence the request to remove GST on export freight,” Mr. Hamid Ali said.
The Chief Ministers of Kerala and Tamil Nadu, Finance Ministers of both the States and a few MPs have been intimated about the situation.