Commerce min seeks funds for export sops.

NEW DELHI: The commerce department has sought additional resources from the finance ministry to continue providing export sops to sectors still to find their feet in the global market.

With a large number of sectors such as leather, engineering goods, textiles and pharmaceuticals lobbying for continued support, the department is apprehensive that lack of resources could be a serious constraint.

“In our consultations with various interest groups, we have received a plethora of requests for continuation of sops. We have to prioritise and look for resources to provide them,” said a commerce department official.

Commerce and industry minister Anand Sharma had said earlier this year that his government would announce a fresh round of incentives for vulnerable sectors that still needed handholding in the global market.

The global economic crisis served a severe blow to Indian exports which remained in the negative territory for thirteen months, before making a comeback in November 2009. While the growth rate since has been robust, it is mostly due to a low base effect.

“Although sectors such as leather, pharmaceuticals and engineering are registering positive growth since the beginning of this fiscal, it will be a while before they regain lost ground in foreign markets,” the commerce department official said, requesting anonymity.

There are concerns on the exports front since the debt crisis in Greece has cast a shadow over the European economy —India’s largest market for exports.

The biggest incentive available at present to exporters is a market-linked scheme under which exporters get sops worth 2% of the value of the shipped consignments to cetain identified markets. In January this year, the commerce department had announced incentives for more than 2,000 products at an estimated cost of Rs 400 crore till March 31 2010 under the scheme.

Later, it increased the list by including several other products including garments, electronic items, chemicals and engineering products at an estimated cost of Rs 625 crore. However, most of these sops ran out on March 31, whith just garments, that cornered about Rs 400 crore of the allocation, getting it till September 30 2010.

The commerce department exercise to identify vulnerable sectors will have to determine how many should continue to get sops beyond March 31 2010. Once new sops are announced they will be available with retrospective effect.

“It is a difficult exercise. Each sector and the associated lobby groups feel that they should be getting the sops. However, we know that we can’t give it to everybody who has been getting it,” the official said, adding that the decision would also depend on how much more money the finance ministry agrees to dole out.

India exported goods worth $16 billion in May 2010 posting a 35% growth over last May’s exports worth $11.9 billion.

Source : economictimes.indiatimes.com