Govt to announce incentives for exporters soon

The government will soon announce incentives for exporters to cushion decline in exports on back of contracting demands overseas.

"We have had a very intense scrutiny, and we have looked at the sectors which are weak, also the regions in the world where the demand has contracted… And whatever is possible, given the constraint of resources, we are seriously considering and we shall take a final view very shortly," said Anand Sharma, Minister for Commerce & Industry.

He was speaking on the sidelines of the Indo-Asean Business Fair organised jointly by the Federation of Indian Chambers of Commerce & Industry (FICCI) 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 bloc.

 

Outbound shipments from India contracted for the seventh straight month in November declining by 4.17% to $22.29 billion against $23.27 billion registered in the same month in the last financial year.

Sharma added, "We are definitely concerned on two counts: contraction of demand in some of the major markets globally as a result of which exports have fallen. It has a direct bearing on the industrial productivity. And secondly, the trade account deficit, we have to do everything which is within our reach, to push our exports and to keep the trade account deficit within the manageable limits."

He indicated that additional sectors may be brought under the interest subvention scheme of two% for exporters.

Cumulatively, between April and November this year, exports registered a fall of 5.95% to $189.22 billion, while imports recorded a decline of only 1.58% at $318.72 billion. Consequently, trade deficit rose to $129.5 billion, higher than $122.6 billion reported in the same period last fiscal. This may dash initial optimism of the Commerce department that trade deficit would be lower this fiscal against $185 billion in 2011-12.

Earlier, imports had also contracted till August, so trade deficit was under control. However, now even trade deficit has started rising, which may aggravate current account deficit (CAD) situation in India which was projected to come down to 3.6% of GDP this fiscal by the Prime Minister's Economic Advisory Council as compared to 4.2% last fiscal.