Govt rolls out Rs 1K-cr sops for exporters.

NEW DELHI: The government handed out a Rs 1,000-crore ($214 mn) package of fresh incentives to exporters still struggling in an uncertain global market, and said it would review the situation in a few months. “We are not out of the woods yet,” said commerce and industry minister Anand Sharma, while announcing the annual trade policy review on Monday.

“The uncertainty surrounding exporters’ prospects continues to linger,” he said. The incentives announced are targeted at labour-intensive export sectors such as leather, carpets, handicrafts, engineering goods, jute and ready-made garments, which face an uncertain six months due to troubles in their largest markets such as the US and Europe.

Exports account for less than a fifth of India’s $1.2 trillion economy, but it helps reduce poverty in the country by creating a large number of jobs. The government is confident of achieving the targeted $200 billion exports for the year, despite a moderation in exports growth to 13.2% in July after five months of over 30% growth.

The review evoked mixed response from exporters with extension of popular schemes getting a thumbs up and lack of effort to lower transactions costs coming in for criticism. Duty-free imports of capital goods has been allowed till end-March 2012 and more sectors included to encourage investments and technological upgradation.

The 2% interest subsidy has been extended to textiles, leather and jute industries for the entire 2010-11. “The policy positively affects all sectors as it not only supports labour-intensive sectors, but also ensures continuity of old schemes,” Fieo chief A Sakthivel said.

It is, however, curtains for the popular import duty reimbursement scheme DEPB, which has been extended for “one last time” till June 31, 2011. “It is time to move on. Current happiness always comes with future shocks,” commerce secretary Rahul Khullar said justifying the decision to discontinue the DEPB.

Once the goods & services tax (GST) is rolled out, exporters could claim refund of GST, instead of claiming input duty refund through the DEPB scheme, which could be challenged at the WTO because of its non-transferable nature. “We need to keep running around for getting refunds,” said Delhi Exporters Association (DEA) president SP Agarwal. He said the government offered no solution for such real issues.

The government has, however, taken note of the concern and set up a task force to suggest measures to cut transactions costs by as much as 40%. More sectors could be included in the list of beneficiaries later this year as the commerce department has planned a review in November, though fiscal constraint could limit the benefits.

The new sops are mostly in the form of additional 2% bonus in the form of duty-free scrips for exporting under the focus product scheme to go with the 2% export value already available. The scrips can be used by exporters to import goods duty free or could be sold in the market. The commerce minister ruled out export of wheat and non-basmati rice till there is a clearer estimate of crops. The government had banned export of several food items last year after food prices rose sharply in the aftermath of a severe drought.

Source : economictimes.indiatimes.com