Struggling exporters get Rs 500-cr lifeline
The Economic Times, January 13, 2010, Page 11
Specific Incentive Schemes Comes To Rescue Of Over 2,000 Products
Our Bureau NEW DELHI
THE government has announced additional incentives for export sectors which are still struggling under the impact of the global economic crisis. This comes in the wake of growing debate over rolling back the fiscal stimulus follwoing strong industrial growth.
Beginning January 1, exports of 2,000 new products from sectors such as engineering, handicrafts, textiles, chemicals, electronics and some metals will be allowed duty free import of inputs under the existing product and market specific incentive schemes, commerce minister Anand Sharma announced on Tuesday.
The list of eligible countries under the market linked scheme has also been expanded to include China and Japan, large markets for Indian goods.
The package will not impose any additional burden on the government finances as the commerce department is funding it from its budgetary resources. These additional benefits will cost Rs 450 crore — Rs 500 crore for the remaining three months of the fiscal year.
Addressing the media, Mr Sharma said that while the export sector had showed recovery in the last two months of 2009, which would substantially help in closing the gap between last fiscal’s export figures and this fiscal’s performance, it had to be viewed in the backdrop of a low base and 13 consecutive months of fall in exports.”
The new incentives follow a sectoral review by the commerce ministry, which revealed that some sectors were still struggling from a demand crunch in the overseas market. The rising rupee had also eroded the competitiveness of India’s exports.
Mr Sharma said that the commerce department has asked the finance ministry to reduce the rate of interest for dollar credit (to Libor plus 1% instead of Libor plus 3%). "We understand that the strengthening rupee could affect the profitability of exporters, that is why we have asked the finance min to reduce interest rates on dollar credit," he said.
Exporters will get duty free scrips or certificates valued at 2%-5% of value of exports. These can be either used to import goods duty free or sold in the market for use by other importers.
Exports registered a growth of 18% and 15%, respectively, in November and December after 13 months of continuous fall, but cumulative exports for the current fiscal is still much lower than last fiscal’s exports. Exports in the first three quarters of the current fiscal approximately valued at $119 billion is about 19% lower than $146 billion of exports in the comparable period of the previous fiscal.
Federation of Indian Export Organisation (Fieo) chief A Sakthivel pointed out that inclusion of China & Japan in the Market Linked Focus Product Scheme will help in addressing adverse trade balance with these countries which is becoming a cause of concern.
He also said that the government needs to extend benefits to the garment sector also for export to EU and US as these markets are still not showing improvement. The commerce department is also in talks with the finance ministry for continuation of interest subvention or discount provided to labour incentive industries and including additional sectors like engineering and chemicals in the list.
Industry body Ficci, said the finance minister should positively consider the industry demand for providing interest subvention to additional sectors including engineering goods & chemicals, continuation of interest subvention of 2% for the existing 7 sectors and provide dollar credit at lower rate of interest. "We have also asked the finance ministry to continue interest subvention (discount) of 2% provided to labour intensive sectors and extend it to additional sectors including engineering sectors and chemicals," Mr Sharma said addressing a press conference.
The Economic Times, January 13, 2010, Page 11
Specific Incentive Schemes Comes To Rescue Of Over 2,000 Products
Our Bureau NEW DELHI
THE government has announced additional incentives for export sectors which are still struggling under the impact of the global economic crisis. This comes in the wake of growing debate over rolling back the fiscal stimulus follwoing strong industrial growth.
Beginning January 1, exports of 2,000 new products from sectors such as engineering, handicrafts, textiles, chemicals, electronics and some metals will be allowed duty free import of inputs under the existing product and market specific incentive schemes, commerce minister Anand Sharma announced on Tuesday.
The list of eligible countries under the market linked scheme has also been expanded to include China and Japan, large markets for Indian goods.
The package will not impose any additional burden on the government finances as the commerce department is funding it from its budgetary resources. These additional benefits will cost Rs 450 crore — Rs 500 crore for the remaining three months of the fiscal year.
Addressing the media, Mr Sharma said that while the export sector had showed recovery in the last two months of 2009, which would substantially help in closing the gap between last fiscal’s export figures and this fiscal’s performance, it had to be viewed in the backdrop of a low base and 13 consecutive months of fall in exports.”
The new incentives follow a sectoral review by the commerce ministry, which revealed that some sectors were still struggling from a demand crunch in the overseas market. The rising rupee had also eroded the competitiveness of India’s exports.
Mr Sharma said that the commerce department has asked the finance ministry to reduce the rate of interest for dollar credit (to Libor plus 1% instead of Libor plus 3%). "We understand that the strengthening rupee could affect the profitability of exporters, that is why we have asked the finance min to reduce interest rates on dollar credit," he said.
Exporters will get duty free scrips or certificates valued at 2%-5% of value of exports. These can be either used to import goods duty free or sold in the market for use by other importers.
Exports registered a growth of 18% and 15%, respectively, in November and December after 13 months of continuous fall, but cumulative exports for the current fiscal is still much lower than last fiscal’s exports. Exports in the first three quarters of the current fiscal approximately valued at $119 billion is about 19% lower than $146 billion of exports in the comparable period of the previous fiscal.
Federation of Indian Export Organisation (Fieo) chief A Sakthivel pointed out that inclusion of China & Japan in the Market Linked Focus Product Scheme will help in addressing adverse trade balance with these countries which is becoming a cause of concern.
He also said that the government needs to extend benefits to the garment sector also for export to EU and US as these markets are still not showing improvement. The commerce department is also in talks with the finance ministry for continuation of interest subvention or discount provided to labour incentive industries and including additional sectors like engineering and chemicals in the list.
Industry body Ficci, said the finance minister should positively consider the industry demand for providing interest subvention to additional sectors including engineering goods & chemicals, continuation of interest subvention of 2% for the existing 7 sectors and provide dollar credit at lower rate of interest. "We have also asked the finance ministry to continue interest subvention (discount) of 2% provided to labour intensive sectors and extend it to additional sectors including engineering sectors and chemicals," Mr Sharma said addressing a press conference.
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