2 per cent credit relief for exporters in 2nd package
Government initially planned to announce measures to boost exports, but it has been postponed by a week due to the Gujarat elections.
The government had initially planned to announce measures to boost exports this week-end, but it has been postponed by a week due to the Gujarat elections, a government official said.
"The finance ministry has agreed to extend interest subvention to the engineering, gems & jewellery and leather sectors, that are not doing well, although, initially it had problems with including the engineering sector," the official told ET.
The package may now be announced on December 21, the official said. Lack of adequate and affordable credit is the biggest problem ailing the exporters at the moment, pointed out Rafeeque Ahmed, president, Fieo. "The share of credit going to exporters has gone down from 4.3 per cent in December 2011 to 3 per cent at present. The cost of credit is also high putting further pressure on finances," Ahmed said.
Exporters pay anything between 11.5 per cent to 13.5 per cent as interest on credit which is higher than all competing countries.
The export subvention scheme, which provides a 2 per cent discount to exporters of identified sectors, gives some relief to exporters.
The foreign trade policy announced in June this year extended the scheme to sectors including toys, sports goods, processed agricultural products and ready-made garment, apart from SMEs and the handloom sectors.
The government is now set to announce the next booster dose of incentives as exporters have posted negative growth for seven straight months from May 2012 despite the first package.
Exports have fallen 5.95 per cent in the April-November 2012 period to $ 189.22 billion compared to the same period in the previous fiscal. Sops for incremental exports is also on the cards, the official said.
As per plans, exporters who manage to increase their exports over a comparable period in the previous year will get some sop for the incremental goods that they have managed to sell.
More markets and sectors are likely to be covered under the focus product and focus market schemes as there are funds left over with the commerce department after announcing the first package. Import duty exemption scrips are given to exporters selling identified products and shipping to identified markets under the two schemes.
Ahmed said the export target of $360 billion for this fiscal seemed elusive and prospects for 2013 were also not too bright.