Indian government  has announced incentives, especially in the form of interest subsidy, to revive merchandise exports that have slumped by almost six percent in the first eight months of the current financial year.
Commerce and Industry Minister Anand Sharma announced the incentives and expressed hope that it would help revive exports.
As part of the package, the government decided to extend the interest subsidy under the “Interest Subvention Scheme” by one year till March 2014.
Sharma said 2 percent interest subsidy on rupee export credit which is available to certain specific sectors, including handicrafts, carpets, handloom, readymade garments, processed agriculture products, sports goods and toys, has been given an extension up to March 31, 2014.
The scheme was scheduled to end March 31, 2013.
Along with this, small and medium enterprises (SMEs) for all sectors will now be able to avail the benefits of the scheme.
India’s merchandise exports dropped by 5.95 percent to $189 billion in April-November period this year as compared to $201 billion recorded during the corresponding period of last year.
The government has set a target of $360 billion exports for the financial year ending March 2013, which seems almost impossible now.
Sharma admitted that the target was difficult, but declined to give any fresh target for foreign trade this fiscal.
“We are finding it difficult… I am not in a position to give you a speculative number. But we will make every possible effort. It is an imperative for us to give a determined push to India’s exports,” he said.
Sharma also announced the introduction of a “pilot scheme” of 2 percent interest subvention for project exports through EXIM Bank for countries of South Asia Association of Regional Cooperation (SAARC) region, Africa and Myanmar.
“The scheme will be operational immediately for a combined worth of $500 million to begin with. The interest subvention would be linked to the buyer’s credit scheme which was introduced in the last financial year,” the minister said.
Industry lobbies welcomed the government’s incentive plan saying it would help revive foreign trade growth.
“The set of export sops will be critical in arresting the recent declining trend in our exports,” said Didar Singh, secretary general, Federation of Indian Chambers of Commerce and Industry (FICCI).
Welcoming the move, A. Sakthivel, chairman, Apparel Export Promotion Council (AEPC), said the extention of interest subsidy would help boost exports.
“It will surely give needed thrust to the apparel and textiles sector which was reeling under the sluggish markets of US and Europe,” Sakthivel said.