The Union Budget has handed minor export sops to just a handful of sectors like leather, gems and jewellery, and rice-bran oil cake, but exporters struggling to cope in a crisis-ridden global market can hope for more in next month’s Foreign Trade Policy.
“I look forward to the changes that will be made to the Foreign Trade Policy next month and I assure my support to measures that will be taken to boost exports of goods and services,” Finance Minister P. Chidambaram said in his Budget speech on Thursday.
Recognising leather and leather goods as a thrust sector for exports, the Finance Minister sought to help the sector indirectly by reducing the duty on specified machinery for manufacture of leather and leather goods, including footwear, from 7.5 per cent to five per cent.
Import duties on pre-forms of precious and semi-precious stones are also proposed to be reduced from 10 per cent to two per cent “to encourage exports’’.
Demand slump
India’s exports started declining since May last year due to contraction in demand in the European Union, the US and prominent Asian markets such as China and Singapore.
Although in January this year, exports managed to crawl out of the negative territory by posting a minuscule growth, overall exports contracted 4.86 per cent to $239.68 billion in the first 10 months of the fiscal compared with the previous year.
Exporters are hopeful that the Finance Minister would walk the talk next month and allow the Commerce Minister to announce another incentive package to boost exports and check the rising trade deficit that has resulted in a record high current account deficit.
“The Budget has not addressed the issue of cost of credit and aggressive marketing initiative required at this difficult time. I hope Finance Minister will liberally consider such demand when Foreign Trade Policy is announced next month,” FIEO President Rafeeque Ahmed said.
The Commerce Minister announced a host of sops for exporters in December 2012 that included interest rate subvention for select sectors and direct incentives for exporting specific items and selling to identified markets.