NEW DELHI: The decision to exempt small exporters from furnishing bank guarantee for shipping goods and services is a much needed solution that will help reducing transaction time and cost of exporters, FIEO said today.

Federation of Indian Export Organisations (FIEO) in a statement said micro and small exporters will be immensely benefited from this decision as they were struggling to get bank guarantee.

"This is much needed simplification which will help in reducing transaction time and cost of exporters," it said.

The finance ministry yesterday stated that the government has decided to exempt small exporters from furnishing bank guarantee for shipping goods and services.

"We should gradually move towards e-LUT (Electronic Legal Undertaking) which can be furnished online so as to eliminate any physical interaction with the tax authorities," it added.

Under the Goods and Services Tax (GST), an exporter can get exemption from payment of IGST if he submits bonds or LUTs.