The Union Textiles Minister, K. S. Rao, on Wednesday, said he would soon take up with the Commerce Ministry the issue of restoration of export incentives under the Focus Market Scheme (FMS) given to cotton and cotton yarn exporters.
“I will be writing to the Commerce Ministry in this regard. It withdrew FMS, which was given to cotton and cotton yarn exporters, and it was based on the belief that we have already got surplus production in this country. So, they must have thought that it is not necessary,’’ Mr. Rao told reporters at the end of the meeting of State Ministers of Textiles.
The Directorate-General of Foreign Trade (DGFT) was of the view that these products were availing export incentives under FMS. Nevertheless, there were curbs on their exports, he pointed out. He felt that to deal with the issue of current account deficit (CAD), the Commerce Ministry should encourage textiles exports. The objective of the FMS was to offset the high freight cost and other disabilities to select international markets with a view to enhancing export competitiveness. It allowed 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 government has imposed quantitative restrictions on the exports of cotton and cotton yarn.
The objective of the FMS is to offset the high freight cost and other disabilities