The Centre on Thursday announced Rs 900 crore-worth incentives for exporters. These were mainly for exporters in sectors such as engineering, pharmaceuticals and chemicals as well as for those exporting to markets such as Latin America, Africa and CIS (Commonwealth of Independent States).
This package -- along with the restoration of the 2 per cent interest subsidy scheme by the Reserve Bank of India on Tuesday for labour-intensive export sectors such as carpets, handicrafts and handlooms as well as small and medium enterprises -- has taken the total ‘Diwali bonanza’ for exporters to around Rs 1,700 crore.
These sops -- aimed at market diversification, addition of more products to the country’s export basket and procedural simplification -- come at a time when the country's export growth has slowed down mainly due to the fall in demand in traditional markets such as the US and European Union.
The new incentives, announced by the Commerce, Industry and Textiles Minister Mr Anand Sharma, have been made part of the annual supplement to the Foreign Trade Policy (2009-14).
On the revenue outgo due to the incentives, the Commerce Secretary Dr Rahul Kullar said, “In a ballpark range, excluding interest subvention, it will be around Rs 800-900 crore. For interest subvention it will be around Rs 800-Rs 1,000 crore. Therefore, the total is around Rs 1,700 crore.”
Mr Ramu S Deora, President, Federation of Indian Export Organisations, said, “It is a Diwali bonanza. We were not expecting this much.” Dr Rajiv Kumar, Secretary General, FICCI, said these additional benefits “would be vital in stepping up the competitiveness of our exports.”
The highlights of Thursday’s announcement include a Special Bonus Benefit Scheme covering 50 products in engineering, pharmaceuticals and chemicals sectors. These items will get the benefit of the rate of duty credit of one per cent of the Free On Board (FOB) value of exports for shipments made between October 1, 2011 and March 31, 2012.
A Special Focus Market Scheme (SFMS) has been introduced providing additional one per cent duty credit for exports to relatively new markets such as Latin America, Africa and CIS countries. This duty credit is over and above the duty credit granted under the Focus Market Scheme (FMS) -- which means if an item covered under FMS is exported to the countries listed under SFMS, then the total duty credit available would be at 4 per cent.
Noting the decline in apparel exports to major markets such as the US and EU, the Government also extended the Market Linked Focus Product Scheme (MLFPS) for exports from this labour-intensive sector to the US and EU. The duty credit under this scheme would be available to apparel exports during this fiscal at 2 per cent of the FOB value of exports.
The Government has also extended MLFPS for exports of agricultural tractors of over 1800 cc to Turkey as well as shipments of sugar machinery and high pressure boilers to Brazil, Kenya, South Africa, Egypt and Tanzania.
The list of items under the Focus Product Scheme (FPS) has been expanded to include 130 additional items mainly in sectors of chemicals/pharmaceuticals, textiles, handicrafts, engineering and electronics sectors. The items will get duty credit scrip at 2 per cent of the FOB value of exports.
The Government has simplified the procedures for transfer / sale of imported firearms. It has also liberalised the import of radioimmunoassay kits (used in the diagnosis of disease / disorders in humans and animals) by shifting it from the ‘restricted’ category to ‘free’ subject to prior permission of the Atomic Energy Regulatory Board.
Besides, Bhubaneswar (for marine products), Firozabad (glassware) as well as Agartala (bamboo and cane products) have been notified as towns of export excellence.
Interestingly, the Government is also devising a novel ‘Niryat Bandhu’ scheme for mentoring first generation entrepreneurs in the export and import business.
Also, the Directorate General of Foreign Trade has become India’s first digital signature enabled department in the Union Government. It has introduced a higher level of encrypted digital signature aimed at increased security and privacy of online communication.
Meanwhile, the Government is likely to soon make an announcement on extension of Zero Duty Export Promotion Capital Goods Scheme and Status Holders Incentive Scheme till this fiscal end. Mr Sharma has held meetings with the Finance Minister Mr Pranab Mukherjee in this regard.