Commerce Minister Anand Sharma meets Finance Minister Pranab Mukherjee to discuss export incentives.

NEW DELHI: Commerce and industry minister Anand Sharma met his finance counterpart Pranab Mukherjee on Tuesday to discuss fund requirements for incentivising exporters as part of the annual foreign trade policy to be announced on June 5. Sectors to benefit include labour-intensive ones like textiles, handloom, leather, handicraft and carpets and the small and medium industry across sectors.

"The ministers discussed the funds that could be allocated for export incentives and how it should be distributed amongst sectors," a government official told ET.

The government, so far, did not announce any fresh incentives for exporters despite a steady decline in growth over the past six months because of resource constraints and the inability to contain fiscal deficit.

That was the primary reason why FM Mukherjee allowed export sops worth over Rs 1,700 crore, which included an interest rate subvention or discount scheme for select sectors and market and product linked cash incentive schemes, that were announced in October last year, to lapse on March 31.

Things have, however, changed since March with the economy's focus now shifting to the growing trade deficit and current account deficit, which, if left unchecked, could result in severe depletion of foreign reserves and lead to sharper devaluation of the Rupee.

India's exports started slowing down in the last seven months with a mere 3.2% growth registered in April 2012 over April 2011. Although exports in 2011-12 breached the $300 billion target by posting a 21% year-on-year growth, the last six months of 2011-12 showed a sharp deceleration in growth to 10% with the months of September and March posting negative growths.

Source : economictimes.indiatimes.com