Government extends export sops worth Rs 1,050 crore

Continuing the tone of the Foreign Trade Policy (2009-14) unveiled last year to arrest and reverse the declining trend of exports, the government, while modifying the export policy, extended continuation of virtually all schemes doling out sops in one form or other to exporters to help through the weak global economic recovery.

Notable export-promotion schemes include the popular and exporter friendly Duty Entitlement Passbook (DEPB) scheme, subsidised interest on money borrowed for exports and sops for import of capital goods for manufacturing a wide range of products for export.

“Economies around the world are still emerging out of the shadows of a grim recessionary period. The uncertainty surrounding exporters’ prospects continues to linger. We are not yet out of the woods,” Commerce Minister Anand Sharma said while unveiling the annual supplement 2010-11 to the FTP (2009-14).

While extending various ongoing export promotion schemes, he made it clear that the popular DEPB, under which taxes are reimbursed to exporters, was being extended till June 30, 2011 for the last time.

The government is already under pressure to drop the DEPB as it is being perceived as incompatible with the global trade rules under World Trade Organisation (WTO). In a bid to ensure availability of cheaper export credit, the government again extended the popular interest subvention of 2 per cent for pre-shipment credit, which is already available for labour-intensive segments like handloom, handicraft  to other sectors like engineering, leather, textiles and jute till March 31, 2011.

To give instantaneous benefits to such labour-intensive sectors still hit by global slowdown, the annual review of FTP extended a 2 per cent bonus incentive under the Focus Product Scheme (FPS) to as many as 135 items. These include handicrafts, handlooms, silk, carpets, leather products, sport goods, toys, bicycles, etc.

Besides, 256 new products will now come under the FPS and be entitled to 2 per cent bonus incentives. These include engineering, electronics, rubber products, packaged coconut water and coconut shell worked items. The 2 per cent duty benefit to garment exporters under the Market Linked Focused Product Scheme for shipment to the 27-nation European Union (EU) block will be extended from October 2010 to end March 2011.

To promote export through technological up-gradation government extended zero duty EPCG scheme by one more year till March 31, 2012 for import of capital goods. The benefit of the scheme has been extended to cover segments like paper, ceramic products, glass, rubber, marine products, sports goods and toys.

The government also provided special flexibility for transferability of duty credit scrips issued to recognised exporters. Significantly, the annual supplement indicated steps being contemplated by the government to reduce transaction cost of exports. Currently, transaction costs are estimated at 7 to 8 per cent of the value of exports. Sharma also said he was optimistic of achieving the target of $200 billion worth of exports in the current fiscal.