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The Commerce Department is demanding more funds from the Finance Ministry for this year’s annual foreign trade policy (FTP) on the ground that improved revenue collections could fund a more ambitious incentive package for exporters beyond the Rs 3,000-3,500 crore agreed to so far.
Commerce Department officials are in talks with their Finance Ministry counterparts on expanding the proposed basket of schemes and benefits for exporters.
Commerce & Industry Minister Anand Sharma is also expected to meet Finance Minister P. Chidambaram on the issue after he is back from Brussels on Tuesday. The FTP for 2013-14 is scheduled to be announced on Thursday.
“With increased exports being viewed as the only credible way to bring down the current account deficit that is reaching new highs, the Finance Ministry should part with as much funds as possible to incentivise exporters,” a Commerce Department official told Business Line .
The revenue situation is relatively comfortable at the moment with indirect tax collection for the fiscal over-shooting the revised estimates and overall tax collections expected to stay within target.
The Commerce Department is, therefore, trying to extract a commitment of around Rs 5,000-6,000 crore so that more products and countries could be covered under its various incentive schemes, the official added.
India’s exports fell sharply between May 2012-December 2013 owing to continued uncertainty in the EU and US markets and low demand in other key markets such as Japan and the Asean. While exports rose slightly this January and February, the overall growth figure for the year is expected to be negative.
The Commerce Department is looking at a number of incentives for exporters that include sops for exporting to a larger number of markets and for shipping a longer list of products under the Focus Product, Focus Market and Market-linked Focus Product schemes.
“We are hoping that important markets like Brazil and South Africa that have been so far excluded from the Focus Market scheme will qualify this time for sops,” said FIEO Director-General Ajay Sahai.
While the Commerce Department had so far not extended benefits to markets and products that are already popular with exporters, with an increased budget this year it may be possible to do so.
The Commerce Department has also made a case for expanding the number of sectors that get benefit from the interest subvention scheme that allows exporters to get cheaper credit from banks.
Sectors such as gems & jewellery, leather and a greater number of engineering goods could be extended the benefits of the scheme this year and efforts are also on to increase the discount rate from the existing two per cent.
Other incentives that are being considered include an amnesty scheme for importers of inputs at discounted rates who have not met their export obligation and transferability of import duty benefits that accrue to status holders who do not import inputs.
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