January-December fiscal year gets thumbsup from exporters
Exporters have said that any change in the financial year to align with the calendar one is a welcome move. On Tuesday, the Madhya Pradesh government became the first state to announce that it is shifting to the January-December cycle. On a national level, the Centre has also started making preparations for switching over to a similar financial year cycle. It had also constituted a high-level committee under former chief economic advisor Shankar Acharya to examine the possibility of making such a move. “Since most other countries follow a January-December financial year, any move in this direction will be helpful,� said Ajay Sahai, director general, Federation of Indian Export Organisations.
This will allow for a proper mapping of India’s foreign trade visà-vis global trade, something which is difficult to do right now, he added. However, on the business side, the move is not expected to impact exporters much, he added. Economists also supported the argument that companies would not see minimal, if any, changes to their profitability and ease of doing business. “Apart from some multinational companies who now have to do their tax and accounting in line with the financial year followed by their parent company based abroad, firms will not see any significant changes in their operations, said Devendra Pant, chief economist, India Ratings & Research. Industry sources also said it will help in the ease of doing business.
“It will help firms align with global trade practices and get export, based on a better understanding of global demand,” said Siddhartha Rajagopal, executive director at the Cotton Textiles Export Promotion Council (Texprocil) said. However, it will not provide India with any advantage with regards to its international competitors, he added. On the other hand, companies usually publish quarterly figures, which will not see any changes. Prime Minister Narendra Modi had also asked chief ministers at meeting of the Niti Aayog to study the idea of a change in the financial year and suggest ways that can help implement it. READ MORE ARTICLE SOURCE – BUSINESS STANDARD