Exporters likely to get another round of sops.

New Delhi: Exporters could get another round of sops to help them retain their foothold in the rapidly shrinking global market, especially in the crisis-ridden Eurozone.

The commerce department is reviewing the situation at various export centres across the country and is likely to take a call on a supplementary package of sops soon, a government official told ET.

"There is a surplus left from the allocation that was made for product and market-linked incentive schemes that were announced in the annual supplement to the foreign trade policy in June," the official added. "The commerce department is waiting for the right time to announce additional incentives."

Exports powerhouse China reported only 1% increase in shipments in July, as sales to the European Union contracted sharply, suggesting even more stress for Indian traders.

Exporters industry body, Federation of Indian Export Organisations (FIEO), said it has sent a list of products that might need additional support to the government.

"Consultations for facilitating smooth trade have already been held between top government officials and exporters at various centres, including Delhi, Kolkata, Bangalore, Ahmedabad, Mumbai and Hyderabad. We have given a list of products that are not doing very well and may need some extra help," Ajay Sahai, director general, FIEO.

India's exports dropped for second month running in June, declining 5.45% from a year ago, mainly due to the continuing financial turmoil in the EU and looming uncertainty in the US.

The decline in exports in May was 4.16%. And things appear grim. The WTO has estimated growth in global demand to decelerate to 3.7% in 2012, which is lower than last year's slow growth of 5%. World trade grew at 13.8% in 2010.

The WTO attributed the slowdown to the global economy losing momentum due to a number of shocks, including the European sovereign debt crisis.

"Buyers in Europe are careful. They prefer holding on to their money. So, they are giving their orders very slowly," said S P Agarwal, an exporter of handicrafts to European countries like Germany and France. Agarwal said the incentives by government in June did not prove to be enough as was obvious from the declining export numbers and there was need for much more.

The annual supplement to the foreign trade policy or FTP announced in June included a 2% interest discount or subvention scheme for a number of sectors like toys, sports goods, processed agricultural products and ready-made garment, apart from SMEs and the handloom sectors.

The focus product and focus market schemes, wherein the government gives cash incentives equivalent to 2% of the value of exports, were also expanded with the incorporation of 7 new markets and 100 new products.

The commerce department may expand the list of products benefiting from the scheme further in the second tranche of incentives. "There is about 500 crore of earmarked funds for focus product and focus market schemes left over from what was announced in June.

About 800 crore funds had been allocated," the official said.

Source : economictimes.indiatimes.com