The government on Wednesday announced a slew of incentives, for the second time in six months, to boost exports, which had seen their the seventh straight monthly decline this financial year in November, amid dwindling overseas demand due to an economic crisis.
Among the measures announced on Wednesday were an extension of the two per cent interest subsidy on bank loans for certain sectors for an additional year till March 2014, inclusion of the sub-sectors of engineering goods as beneficiaries of the scheme and provision of incentives on incremental exports made to the US, the European Union and countries in Asia.
“With these measures, we should be able to give a push to our exports in the last quarter of this financial year. The objective is to stabilise the situation and try and move from the negative territory to positive,” said Commerce and Industry Minister Anand Sharma.
Though he declined to specify an estimate of the resources being doled out by the government to implement these initiatives, the minister expressed hope that the measures would boost outbound shipments from the country and help in controlling the spiralling trade deficit. India’s trade deficit has increased by nearly a-fifth to $175.5 billion (Rs 9.6 lakh crore) between January and November this year. The trade gap had stood at $146.9 billion in the corresponding period last year.
As part of the incentive package, the government has also announced the introduction of the two per cent interest subvention for exports to countries in South Asia, Africa and Myanmar. The objective of the scheme is to boost exports to these countries by providing long-term concessional credit through EXIM Bank. “This scheme will be operational immediately for a combined worth of $500 million to begin with,” Sharma said.
Said Sanjay Budhia, chairman of the CII National Council on Exports and Imports: “Providing long-term concessional credit through EXIM Bank, as co-financing in infrastructure sectors for SAARC, Africa and Myanmar, will definitely increase exports to these regions. The South Asia region is fast-becoming the world’s economic centre of gravity and though India’s trade with South Asian countries has increased encouragingly--from $7 billion in 2005-06 to $15 billion in 2011-12-- the trade is below the potential.”
The government has also decided to grant incentives on incremental exports that would be made during January-March 2013 over the base period January-March 2012. According to Rafeeque Ahmed, president of the Federation of Indian Export Organisations, the scheme for incremental growth would act as stimulus for exporters looking at the US, the EU and Asian markets as these three account for close to 80 per cent of the country’s exports.
Cumulatively, between April and November, exports registered a fall of 5.95 per cent to $189 billion, while imports recorded a decline of only 1.58 per cent at $319 billion. Consequently, trade deficit rose to $129.5 billion, higher than $123 billion reported in April-November last year.
