Foreign Trade Policy to offer more incentives

The Government is looking at narrowing the focus of existing export incentive schemes to promote high-potential items, such as textiles, engineering goods and pharmaceuticals, in markets that import heavily.

The import appetite of the target countries, such as China and Russia, will also be given due consideration while drafting promotional schemes, a Commerce Ministry official told BusinessLine .

The Commerce Ministry, which will come up with the Foreign Trade Policy for 2014-19 after the Union Budget is presented next week, is also trying to persuade the Finance Ministry to continue the interest subvention scheme for labour-intensive exports. The scheme lapsed on March 31.

“We are planning to give more market-linked export sops to different products this time instead of incentivising products and markets separately. We can then plan our promotion and marketing drive better. There will also be focus on promoting services exports,” a Government official said.

India missed its export target of $325 billion for 2013-14 as the global slowdown hit demand from key markets in the West. Shipments during the year posted a rise of just 3.98 per cent, at $312.35 billion.

At present, incentives are given under three schemes — Focus Product, Focus Market and Market-linked Focus Product Scheme. More than 750 products and 150 destinations are included in these schemes.

“There is nothing focussed about the Focus Product and Focus Market schemes that we have at the moment,” the official said.

The Commerce Ministry also wants to provide exporters more incentives, as it feels that the existing incentive of 2--5 per cent of export value is not enough.

Big markets such as China, Russia and Brazil, which have so far not been extensively included in the promotion schemes, are now being considered.

Huge potential “There is a large market for pharmaceuticals in China that we can tap if incentivised properly. Russia, too, has huge potential as our exports comprise a very small part of their total imports,” said Ajay Sahai, Director-General, Federation of Indian Export Organisations (FIEO).

The Ministry is also trying to use the foreign trade policy to get more benefits from Free Trade Agreements that it has with countries such as Japan, South Korea, Singapore, Malaysia and other Asean members.

“We believe that if the preferential duty that our exporters get in these countries is backed with export incentives, exports can rise sharply,” the official said.

FIEO has also urged the Ministry to expand the scope of the interest subvention scheme — under which the Government gives an interest subsidy of 3 per cent to select export sectors — and extend it from April 1 this year.

COMMENT NOW