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Exporters in Seventh Heaven, Sops ‘Exceed Expectations’ 06 Jun 2012  
Exporters in Seventh Heaven, Sops ‘Exceed Expectations’

Exporters in Seventh Heaven, Sops ‘Exceed Expectations’

 

NEW DELHI: The government has unveiled a seven-point strategy, including extension of import-tax waiver and interest subsidy, to boost India’s merchandise exports that have been hit by sluggish demand from Europe and US.

The annual supplement to the five-year foreign trade police announced on Tuesday enlarged the scope of tax benefits on imported inputs to include goods sourced locally, aimed at incentivizing domestic manufacturing while encouraging import substitution.

It also extended the interest subsidy scheme on labour intensive exports by a year to March 2013; declared seven countries as focus markets; offered special sops for export units in the North-East; and made e-commerce and courier exports out of Delhi and Mumbai eligible for the export benefits.

The package will help achieve the target growth of 20% over the pervious fiscal’s $303 billion exports despite a weak start, commerce and industry minister Anand Sharma said after releasing the supplement.

“The coming two months can be very testy, but we are working with a plan, “Sharma said in defense of his steep 20% exports growth target for the year.

Exports rose only 3.2% in April from a year ago. The foreign trade policy 2009-14 has set a target of $500 billion exports in the terminal year.

“We are on track to achieve this feat as Indian exports registered a 20.9% growth to $303 billion last year despite the Euro zone crisis, “Sharma said with out putting a number to the exports sops announced.

He said by August the situation should improve.

Under many of the ongoing export promotion schemes, the government provides duty-free scrips to exporters on the basis of their exports, which can be used to pay customs duty on goods imported by them.

These scrips can now be used to pay excise duty on domestically sourced inputs as well, which is expected to encourage import substitution that will help bring down the trade deficit, pegged at nearly 10% of GDP in 2011-12.

The high trade deficit has worsened the current account deficit, which is likely to be 4% of GDP in 2011-12. This has increased pressure on the rupee.

Indian industry welcomed the proposal to encourage exporters to source goods locally.

“This move would provide the much needed thrust to upgrade levels of domestic production.” said Adi Godrej, president, CII.

The government calculations show it lost Rs.52,440 crore in customs revenues on account of the various exports promotion schemes.

In the new scheme, some of this revenue foregone will shift to excise duty loss on account of export promotion scheme.

The 2% interest subsidy available on labour intensive handlooms, handicrafts and carpets that ended on March 31 has been extended by another year and made available to more sectors such as toys, sports goods, processed agricultural products and readymade garments.

The technology upgradation scheme and export promotion capital goods scheme have also been extended by a year.

More countries and products have bee added towards the drive to diversify India’s product basket and destination in a bid to reduce risk of excessive dependence on the traditional markets of Europe and US.

Seven new markets, including Myanmar and Cambodia, have been added to the focus market scheme to promote diversification of exports.

“The announcements have exceeded our expectations.” said Rafeeq Ahmed, president, FIEO.

 

(Source: The Economic Times)
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