Warning that there were challenging times ahead and everyone had to brace up for a tough emerging situation, Union Commerce and Industry Minister Anand Sharma on Thursday announced a Rs. 900-crore package for exporters taking the total “Diwali bonanza” to Rs.1,700 crore, in a bid to cushion exporters from slowdown in the U.S. and Europe.
The package was announced as part of the Foreign Trade Policy (FTP) released by Mr. Sharma at a press conference here. This announcement comes close on the heels of the Reserve Bank of India (RBI) notifying the interest subsidy of 2 per cent for labour-intensive industries such as handicrafts, handlooms, carpets and small and medium exporters. The benefits will largely accrue to exporters of engineering goods, pharmaceuticals and chemicals.
The policy clearly states that those scouting for markets in Latin America, Africa and CIS (Commonwealth of Independent States) will stand rewarded. The new measures will be incorporated in the annual supplement of the Foreign Trade Policy (2009-14).
Speaking on the occasion, Commerce Secretary Rahul Kullar said, “In a ballpark range, excluding interest subvention, it will be around Rs.800-900 crore. For interest subvention, it will be around Rs.800-1,000 crore, a total of about Rs.1,700 crore”.
Around 50 products in engineering, pharmaceuticals and chemicals would get special bonus of additional one per cent of export value between October and March this fiscal. Shipments to Latin America, Africa and CIS regions will also be eligible for additional one per cent duty credit besides three per cent already being given. This is in sync with the export diversification strategy in the wake of demand sluggishness in the U.S. and European markets.
The latest IMF report has warned that risk to Asian economies is decidedly increasing because of European debt crisis and slowdown in American markets. “It is a Diwali bonanza. We were not expecting this much,” Federation of Indian Export Organisations (FIEO) President Ramu S. Deora said.
The Commerce Ministry has announced these incentives in a difficult global environment, although merchandise exports have grown 52.1 per cent in the first-half of this fiscal.
Mr. Sharma said that these incentives were important as the major markets — the U.S. and Europe — were still not out of woods. These two markets account for about 30 per cent of India's total exports. “Times are still challenging. There is a limp recovery in the U.S. and virtually no recovery in Europe. These two countries are having their own myriad problems at present. We have to ensure that markets in which we are engaged, the year-on-year growth should continue,” he added. He said that the apparel sector was given duty credit under Market Linked Focus Product Scheme (MLFPS) for export to the U.S. and Europe. The 2 per cent duty credit would be available to exports made during 2011-12.
It has been decided to extend MLFPS benefit for exports of agricultural tractors (over 1800 cc capacity) to Turkey. The list of items under FPS has been expanded to include 130 additional items mainly in the chemical, pharmaceutical, textiles, handicrafts, engineering and electronics sectors. The products covered under FPS are entitled for 2 per cent duty credit scrip.
The ministry declared Firozabad for glassware, Bhubaneswar for marine products and Agartala for bamboo and cane products as town of export excellence to boost shipments from these areas.
