Govt announces Rs.1,050 crore sops for exporters

NEW DELHI - The government said Monday it will provide an additional incentive of Rs.1,050 crore to labour-intensive sectors, like handicrafts, textiles and leather goods that would help it achieve $200 billion exports target in the current fiscal.

“In order to give immediate relief, a bonus incentive is being provided to sectors whose exports are still not doing well,” Commerce and Industry Minister Anand Sharma said, announcing the annual supplement to the Foreign Trade Policy 2009-14.

The government has already announced an incentive package of Rs.1,350 crore. “Rs.1,050 crore bonus incentive will be in addition to the package announced earlier,” said Commerce Secretary Rahul Khullar, adding the incentive schemes will be effective from April 1, 2010.

Labour intensive sectors such as handicrafts, handlooms, silk carpets, leather and leather manufacturers, sports goods, toys and some bicycle parts businesses are covered under the scheme.

The government has announced an additional bonus of 2 percent, over and above the existing 2 to 5 percent bonus given on 135 products under Focus Product Scheme (FPS). Around 256 new products have been added to the FPS.

Zero duty on Export Promotion Capital Goods Scheme (EPCG) scheme has been extended by a year till March 31, 2012.

The government has also announced a six-month extension of the Duty Entitlement Pass Book scheme (DEPB) which will now expire on 30 June 2011. Under DEPB scheme taxes are reimbursed to exporters.

India’s exports growth slowed to 13.2 percent in July this year against 30.4 percent in the previous month. This has prompted the government to announce incentive measures otherwise it would not be feasible to achieve a target of $200 billion exports in fiscal 2010-11.

“Some sectors are still struggling to recover from the demand shocks of the global economic slowdown. For these sectors we are providing additional benefits,” Sharma said.

On $200 billion merchandise exports target for the current fiscal, he said, “with the present growth trend, we are on course to achieve export target for 2010-11.”

In 2009-10, total merchandise exports from India was $178.66 billion. In the first quarter of 2010-11 exports grew by 32 percent.

In addition to the above mentioned sectors, certain new engineering and electronic items, finished leather, rubber products, packaged coconut water and coconut shell worked items have been covered under the incentive scheme.

Talking to reporters, Khullar said the incentives would be in the form of revenue outgo. “It will be basically in the form of tax outgo and interest rates incentives,” he added.

The facility of interest subvention of 2 percent, currently available for handicrafts, handlooms, carpets and SMEs, is being extended for a number of specified products pertaining to leather and leather manufacturers, jute manufacturing, including floor covering, engineering goods and textile sector for the current financial year.

Most exporters and industry associations welcomed the policy supplement.

Federation of Indian Export Organisations (FIEO) President A Sakthivel said the policy supplement was forward looking and would help the sectors which were in most trouble.

“It will make India’s exports competitive and help us in achieving $200 billion exports target in 2010-11,” said Federation of Indian Chambers and Commerce and Industry (FICCI) President Rajan Bharti Mittal.

Reacting on the annual supplement to the foreign trade policy, Director General of Confederation of Indian Industry (CII) Chandrajit Banerjee said two percent interest subvention being extended to special sectors would greatly benefit many labour intensive sectors.

However, Associated Chambers of Commerce and Industry (Assocham) urged the government to give incentives to technological imports, saying it would make Indian exports competitive.

– Indo-Asian News Service