Cotton, cotton yarn, onion and iron ore exporters will not now get export incentives under the focus market scheme as there are restrictions on their outbound shipments, according to a government notification.

These exporters will now be ineligible for duty credit scrip under the focus market scheme (FMS).

The objective of the FMS is to offset the high freight cost and other disabilities to select international markets with a view to enhancing export competitiveness.

It allows a duty credit of 2.5 per cent of free-on-board value of exports to countries that are identified as focus markets by the government.

The duty credit may be used for import of inputs or goods including capital goods.

“The following categories are added...in the list...bearing the heading ‘Ineligible Exports Categories/Sectors for FMS — export of cotton; export of cotton yarn; exports which are subject to minimum export price or export duty,” the notification said.

At present, there is minimum export price of $900 billion on onion, and an export duty of 30 per cent on iron ore.

An official in the DGFT said that “these products are on one hand availing of export incentives under the FMS while on the other hand there are curbs on their exports.’’

“It is not logical that on one hand we are giving incentives to boost the export and on the other hand also putting restrictions on the shipments,” the official added.

Similarly, the government has imposed quantitative restrictions on the exports of cotton and cotton yarn.

Exporters can apply for registration certificate (RC) for a maximum quantity of 30,000 bales or actual quantity exported in the previous cotton season, whichever is less. One bale contains 170 kg of cotton.

India is the world’s second largest cotton producer.

Cotton production was estimated to be around 340 lakh bales for the 2012-13 cotton season (October to September).

India’s cotton exports are likely to remain flat at around 100 lakh bales (170 kg each) in the 2013-14 season due to lesser demand from China. China is the biggest importer of the Indian natural fibre.

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