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India’s exports in the current year may fall below last year’s figure and trade deficit could rise to $196 billion which may lead to a “crisis’’ if the situation does not improve, Commerce and Industry Minister Anand Sharma has said.
The annual Foreign Trade Policy to be announced in the first week of April will be supportive of exporters and recognise the stress that trade is going through, the Minister said at the meeting of the Board of Trade on Friday.
“What is very disturbing and challenging is that our exports have not even reached where we were before at $306 billion last year. Our trade deficit will be somewhere between $193 billion and $196 billion. It is not a small number. That is where the crisis is,” Sharma said.
Exports had declined for eight straight months starting May 2012 mostly due to contraction in demand in the EU and the US. In January and February this year, exports posted a small growth, but fiscal deficit continued to be high because of higher growth in imports.
Exporters have called for more market-specific sops that include an export development fund to help promote exports in different countries, an expansion in the focus product, focus market and market-linked focus product schemes that offer cash incentives in the form of duty-free scrips and easier credit.
On the issue of availability of dollar credit, which exporters including FIEO chief Rafeeque Ahmed emphasised would help in bringing down cost of credit, the Minister said that he hoped some progress would be made in disbursement.
“We had inter-ministerial committee of secretaries to oversee disbursement of dollar credit. Dollar credit has to be at the same rate where it used to be when it was made available earlier,” Sharma said.
Recognising that interest subvention or availability of credit at a discounted rate would help exporters be more competitive, the Minister said that the small and medium enterprises and the engineering industry have benefited from it.
“We are seriously considering how to strengthen it more,” he said.
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