Centre to Announce Incentive Package for Exporters Next Week.

 Stating that the government was seized of the situation on the international economic environment and the downturn in the West and Europe, Union Commerce and Industry Minister Anand Sharma on Friday said that a “financial incentive package” for exporters would be announced by next week to brave the emerging global scenario.

“We have carried out a thorough review of the impact of European sovereign debt crisis and slowdown in the U.S. economy on Indian exports. Hopefully, a package of incentives would be announced in the next few days. I will be taking a review meeting of the Board of Trade on October 11 and then formal announcement would be made on the new financial incentives,” Mr. Sharma told reporters after an interactive meeting with the Federation of Indian Export Organisations (FIEO) and with the heads of export promotion councils (EPCs) and commodity boards.

“The government will be finalising what incentives and support can be there, in particular to the labour-intensive sectors,” he said. Mr. Sharma said there was a case for interest subsidy to exporters as the rising credit cost had been making the Indian manufacturing much less competitive globally.

Mr. Sharma said the purpose of Friday's consultation was to conclude the process which the Director General of Foreign Trade (DGFT) and Commerce Secretary had been doing. “I thought that before we come out with the export incentives for the current financial year on October 13, we must have this brainstorming exercise,” he added.

The stakeholders informed the Commerce Minister that the sharp cut in the drawback rates for most exporting items at a time when world demand was slowing down and volatility in the exchange rate was not advisable. “This will have considerable impact in slowing down exports. The high growth rates witnessed during the first two quarters was because the exporters wanted to utilise the benefit of the DEPB scheme,” they said.

Another point raised by them was the high cost of rupee export credit in view of the Reserve Bank of India's (RBI) tightening monetary policy. They urged the Minister to introduce an interest subvention scheme for exporters.

Sharing the concern of the exporter community, Mr. Sharma said the cost of credit had been a matter of serious concern to the industry. There was also the weakening of rupee and the exporters who had booked orders were facing new challenges because there had been hoarding up of orders because of the global slowdown. “If need be I will again discuss these issues with the Finance Minister. The DGFT and the Commerce Secretary will talk to Finance Secretary and officials concerned hopefully within the next 10 days. The demand has weakened in traditional destinations particularly in Europe but there is strong growth in Africa, ASEAN and South America,” he added.

The Textiles Export Promotion Councils said the rising labour cost driven by high inflation, the cost of power for the industry, anti-dumping duty imposed by some importing countries and the need to tap new markets such as Egypt under Focus Markets needed immediate attention.

Source : thehindu.com