Despite the recent fall in outbound shipments, fresh export sops under the much delayed new Foreign Trade Policy are unlikely this fiscal. This is because the Government finds itself financially constrained.

While the Commerce Ministry could announce non-fiscal measures, such as steps to reduce paperwork and transaction time some time early next year, financial sops will have to wait till the new fiscal, a Government official told BusinessLine .

“The Government can’t help it. We just don’t have enough money. If the fiscal deficit target for the financial year of 4.1 per cent of GDP is to be attempted (down from 4.5 per cent of GDP last year), some sacrifices have to be made,” the official said.

Some of the schemes under last year’s FTP, such as Focus Product and Focus Market, will continue till the new fiscal year, but the Government will not give any additional sops to new sectors or increase the amount of incentives, the official said.

Also, schemes that have expired following the lapse of the previous policy, such as interest subvention, will not be provided to exporters this fiscal. Though the interest subvention scheme had expired, exporters were hopeful that it would be notified again with retrospective effect.

Formal notification?

The Commerce Ministry is now working on whether a formal notification stating that all existing schemes (that have not lapsed) will continue till the end of the fiscal should be given out, the official said.

According to an earlier notification, all existing schemes are to be continued till the new policy is announced. “By specifying that the existing schemes would continue till the end of the fiscal, exporters would at least be sure that there won’t be any changes made midway. This will end the uncertainty and they can take their pricing decisions more confidently,” the official said. However, a decision is yet to be taken. In 2013-14, of its total revised expenditure of ₹5,395 crore, the Commerce and Industry Ministry spent ₹1,475 crore on interest subvention (interest subsidy to banks). This year, the interest subsidy amount may have exceeded ₹1,700 crore.

But the frugality will not go down well with exporters who have been pushing for new sops and a continuation of the duty subvention scheme under the FTP for quite some time.

Following the recent 5 per cent decline in exports in October, exporters’ body FIEO had called for restoration of the interest subvention scheme which reduced the interest burden by up to 3 per cent.

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