Union Budget to set tone for coming foreign trade policy.

NEW DELHI: The tone of finance minister Pranab Mukherjee's budget speech next week will determine the fate of the country's exporters and importers anxiously awaiting the annual foreign trade policy (FTP) that spells out their incentives for the next fiscal.

The commerce department is waiting for the finance minister to reveal how strictly expenditure is to be curbed to rein in deficit before it makes demands on its resources.

"Generally, we make a rough estimate of the schemes that we would want to continue in the next fiscal, but this year because of the extraordinary fiscal problem that we are facing, we have decided to wait till the budget," a commerce department official told ET. The official said that the state of the country's finances will become clear once the budget is announced and the finance minister lays down the road map for the year ahead.

"A lot will depend on the deficit targets set for the coming year," the official added.

The commerce department has already concluded its consultations with all export sectors, including export promotion councils, on what they expect from the annual review of the FTP.

Officials say that not only will it be difficult for the government to come up with new incentives, continuation of some of the older schemes may also be a strain.

"Outgo for many of our incentive schemes such as the focus product, focus market and market linked focus product is linked to the exports made. We have to be careful while extending these as we do not want a situation in which we make promises to exporters, but later find it difficult to honour it," the official said.

The commerce department handed out a 1,700-crore package to exporters in October last year that included an interest subvention or discount scheme for some sectors and incentives for exporting specific products to identified markets.

The department already has incentive schemes in place for exporting more than 2,000 products and also gives sops for exporting to 39 markets that includes non-traditional markets such as Latin America and Africa as well as countries such as China and Japan.

The fiscal deficit for the year is expected to overshoot the budgeted target of 4.6% of GDP by a big margin.

India's export growth is on track despite continued uncertainty in the West with the commerce department optimistic about meeting the target of $300 billion fixed for the fiscal.

Source : economictimes.indiatimes.com