The Government is likely to announce interest subvention for exporters to help sustain growth momentum as part of annual supplementary foreign trade policy on June 5.
India's merchandise exports have come under a threat as demand has weakened in key developed markets of Europe and the US.
Trade deficit rises
Exports grew a mere 3.2 per cent in April to $24.45 billion over $23.69 billion in corresponding period last year. In rupee terms, the growth stood at 20.54 per cent. Imports in April were up 3.8 per cent at $37.8 billion, resulting in a higher trade deficit of $13.48 billion.
Despite a weakening rupee, exporters, under pressure to sustain growth, have sought interest subvention to make their merchandise competitive in the international market. The exporters said credit rates were over 12 per cent in India, while it stood at between 2 and 6 per cent in most competitor countries.
Officials in the Commerce Ministry said they were in talks with their counterparts in the Finance Ministry to decide on sectors that need such interest subvention, and also to finalise the quantum and tenure for the same. The subvention is likely to be considered for labour-intensive export sectors such as textiles, garments, leather and marine.
Differential credit rate
On Friday, the Commerce Minister, Mr Anand Sharma favoured a differential credit rate to lift the domestic investment sentiment and sustain export growth. “The economic activity has to be given a push forward, otherwise the negative spin-off can be harmful,” Mr Sharma told newspersons after the Board of Trade (BOT) meeting.
The BOT, an external advisory body, discussed the current export scenario and the impact of the free fall in rupee against the dollar. “Some of the suggestions of the Board of Trade will reflect in the annual FTP,” Mr Sharma said.
Merchandise exports for current fiscal are expected to grow at 20 per cent, he said. The exports grew 21 per cent to $303 billion in the year-ended March 2012.