Business OpportunitiesGovt to announce stimulus for select exporters soon
Decides to provide extra helping hand after a sectoral review
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The commerce and industry ministry will unveil a stimulus package within the next few days for select export sectors, which continue to suffer even as the overall export situation has shown signs of revival.
The incentives would only be meant for those sectors that have failed to show significant improvement despite sops from the government earlier.
The government had initiated a sectoral review in November to assess the impact of stimulus measures to exporters. The sectors that have shown clear signs of revival during the last three months are petroleum products, engineering goods, drugs and pharmaceuticals, leather manufactures, gems and jewellery and readymade garments.
“The sectoral review exercise is over. We have made an assessment and we will soon announce incentives for those sectors which continue to lag and suffer because of demand recessionary conditions notwithstanding what has happened in the last 14 months. For those sectors, we will provide an extra helping hand,” Commerce Secretary Rahul Khullar told Business Standard.
He, however, declined to identify those sectors. But according to official sources, the incentives could be provided to sectors like textile, leather, handicrafts, cotton yarn, jute, minerals and fruit and vegetables in the form of extension of some of the benefit schemes or increasing duty drawback rates.
The stimulus could be in terms of providing more benefits under the Focus Products Scheme (FPS) and Focus Market Scheme (FMS), besides offering greater support through market development assistance and market access initiatives that would enable the exporters market their products more.
Commerce and Industry Minister Anand Sharma had earlier said the government would not hesitate to provide some extra benefits to those sectors which continue to decline and suffer huge job losses. He had also said that the ministry would take as many initiatives as possible to bring export growth back to a rate of 15 per cent by 2010-2011 and 25 per cent thereafter.
“Most of the manufacturing sectors still require some support from the government. We are looking forward to some more measures. Some of the incentives schemes should also continue,” said A. Sakthivel, president, Federation of Indian Export Organisations.
Exports had been plummeting by more than 12-15 per cent since October last year. Earlier, exports were rapidly inching towards a 40 per cent decline during April-May. However, there has been a sharp recovery from June onwards.
Last month, exports registered positive growth for the first time in 13 months, reaching $13.2 billion (about Rs 60,450 crore) from $11.16 billion (about Rs 51,110 crore) in November last year. However, overall exports during April-November still showed a decline of 22.3 per cent at $104.2 billion (about Rs 4,77,230 crore), compared to $134.2 billion (Rs 6,14,630 crore) during the corresponding period in 2008-09.
Minister of State for Commerce and Industry Jyotiraditya Scindia had said in November that some part of the Budgetary allocation was kept aside that would be disbursed after a mid-term analysis.
The government had so far announced three stimulus packages — in December 2008, January 2009 and in the Interim Budget in February — for slowdown-hit industries, including the export-oriented sectors.
Besides, some specific incentives were also given to the exporters in terms of continuation of the Duty Entitlement Passbook Scheme, enhancement of duty drawback benefits, zero duty on Export Promotion Capital Goods scheme and additional funds towards providing guarantee by the Export Credit Guarantee Corporation.
In addition, the Reserve Bank of India also took a series of steps to reduce credit cost and infuse more liquidity into the banking system by reducing the key policy rates.
BREATHER ON ANVIL
* Stimulus to be for the select export sectors that continue to suffer even as the overall export situation has shown signs of revival
* The govt had initiated a sectoral review in Nov to assess the impact of stimulus measures to exporters
* According to ministry officials, incentives could be provided to sectors like textile, leather, handicrafts, cotton yarn, jute, minerals and fruit and vegetables
* Sops would be in the form of extension of some of the benefit schemes or increasing duty drawback rates
* Benefits under the Focus Products Scheme and Focus Market Scheme and greater support through market development assistance could be provided