Govt announces fresh sops for exports to EU

The Government has handed out fresh sops to exporters of a number of labour intensive items such as leather, textiles and chemicals for exporting to the European Union.

The additional incentives provided under the ‘market-linked focus product scheme’ is in the form of a duty credit scrip worth two per cent of what a firm exports. The scrip can either be used to import goods at lower interest rates equivalent to its value or sold by the exporter to other importers in the market.

The move has come as a big relief to exporters of textiles, chemicals and leather as all these items have graduated out of the European Union’s special incentive scheme called the Generalised System of Preferences (GSP) this year.

The scheme, which gave these sectors access to the European market at concessional import duties, continues to be available for competing countries, including Pakistan and Bangladesh.

The Commerce & Industry Ministry has also extended the existing two per cent duty credit scrip for the readymade garments sector to EU and the US from April 1 till further orders. The scheme was to lapse on March 31.

According to a notification issued by the Directorate-General of Foreign Trade last week, 23 new items have been added to the ‘market-linked focus product scheme’.

The items, which include leather, cotton yarn, chemicals, bed linen, table linen and woven fabric, have been given a two per cent incentive for exporting to all 27 EU countries. Other sectors and markets that have not been covered are expected to get their due after the new Government is in place following the General Elections in April or May.

Commerce and Industry Minister Anand Sharma said earlier this month that the Foreign Trade Policy for the next fiscal will be announced by the new Government.

The new sops will be effective from March 1 for six months.

According to exporters’ body FIEO, the new sops will help exporters maintain their competitiveness in the global market.

“The incentive to readymade garments, which have the highest employment intensity and potential, was the need of the hour. This move will help offset infrastructure inefficiencies and other associated costs involved in manufacturing and marketing of these products,” Apparel Export Promotion Council Chairman Virendra Uppal said.