The government will soon announce incentives for exporters to cushion the decline in exports due to contracting demand abroad.
Minister for Commerce and Industry Anand Sharma said: “We have had intense scrutiny, and we have looked at the sectors that are weak, also the regions in the world where the demand has contracted ... and whatever possible, given the constraint of resources, we are seriously considering (incentives). We shall take a final view very shortly.”
The minister made these comments while speaking on the sidelines of the Indo-Asean Business Fair organised by the Federation of Indian Chambers of Commerce & Industry and the Ministry of Commerce and Industry to mark the 20th year of dialogue and 10th year of summit-level talks between India and the 10-member Asean.
Outbound shipments from India contracted for the seventh straight month in November, declining by four per cent to $22.29 billion against $23.3 billion registered in the same month in the last financial year.
Sharma said, “We are definitely concerned on two counts: (Firstly) Contraction of demand in some of the major markets globally, as a result of which exports have fallen. It has a direct bearing on industrial productivity. And, second, the trade account deficit; we have to do everything within our reach to push our exports and to keep the trade account deficit within manageable limits.”
Additional sectors may be brought under the interest subvention scheme of two per cent for exporters, he said.
Cumulatively, between April and November this year, exports registered a fall of five per cent to $189.2 billion, while imports recorded a decline of only 1.58 per cent at $318.7 billion. Consequently, trade deficit rose to $129.5 billion, higher than the $122.6 billion reported in the same period last financial year. This may dash initial optimism of the commerce department that the trade deficit would be lower this financial year against the $185 billion in 2011-12.
Earlier, imports had contracted till August, so the trade deficit was under control. However, it has started rising, which may aggravate the current account deficit situation.
India’s current account deficit was projected to come down to 3.6 per cent of gross domestic product this financial year by the Prime Minister’s Economic Advisory Council, against 4.2 per cent last year.