The Government may extend the interest subvention scheme to export sectors such as gems & jewellery, pharmaceuticals and some engineering products in a bid to push sluggish exports.
The Commerce Ministry has demanded that the Finance Ministry should expand the subvention scheme, under which exporters get credit at a 2 per cent lower rate from banks, in the vote-on-account or interim budget next week. Other issues being pushed by the Commerce Ministry include lowering of import on gold duties to boost exports of jewellery and bringing exports under priority sector lending.
The vote-on-account to be announced on February 17 will be for a period of four months (April-July). After that period the new Government which is formed after the general elections is likely to announce the Budget for the full year.
At present the interest subvention scheme covers sectors such as handicrafts, carpet, handlooms, readymade garments, a number of other textile products, processed agriculture products, sports goods, toys and certain engineering products.
“There are some other sectors that have been excluded such as gems & jewellery, pharmaceuticals and select engineering products that are not included in the scheme but are at present facing turmoil in the export market. The Commerce Ministry wants these to be included,” a Commerce Ministry official told Business Line .
The Commerce Ministry also wants a reduction in gold import duties that has been increased thrice in the current year to 10 per cent to contain the current account deficit. But the Finance Ministry has repeatedly said that it had no immediate plans of slashing gold duties.
While the Reserve Bank of India brushed away the Commerce Ministry’s demand that exports be included in priority sector lending, the Ministry is still pursuing the matter.
“Availability of credit is a big problem faced by exporters which can be sorted out to a large extent if export is identified as priority sector and credit for it is ear-marked,” the official said.