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Business News/ Politics / Policy/  Centre to allocate `3,000 cr more for merchandise exports scheme
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Centre to allocate `3,000 cr more for merchandise exports scheme

The allocation for the scheme for the current financial year has been increased to `21,000 crore from `18,000 crore

Merchandise exports contracted at the quickest rate in five months in August on lower crude prices and tepid global recovery. Photo: MintPremium
Merchandise exports contracted at the quickest rate in five months in August on lower crude prices and tepid global recovery. Photo: Mint

New Delhi: The commerce ministry has agreed to partially revamp the Merchandise Exports from India Scheme (MEIS) by giving higher incentives to ailing exporters after the finance ministry agreed to allocate 3,000 crore more for the scheme.

At a meeting with 27 export promotion councils (EPCs) on the backdrop of contracting shipments for nine months in a row till August, commerce secretary Rita Teaotia said the allocation for MEIS for the current financial year has been increased to 21,000 crore from 18,000 crore.

The representative of an EPC present at the meeting said Teaotia expressed willingness to change the present categorisation of export destinations under the MEIS scheme. At present, countries are divided into three categories—A, B and C for offer of incentives to exporters.

Category A includes traditional markets such as the European Union, the US and Canada, B includes 139 emerging and focus markets countries from Africa, Latin America and Asia. The remaining countries have been grouped in the C category and are not eligible for any incentive.

Exporters are demanding that some Category C countries be transferred to the other two categories, making exports to such countries eligible for incentives.

“Significant exports happen to our neighbours such as Bangladesh, Nepal and Sri Lanka which are currently put in the Category C. Commerce secretary has agreed to look into it after we provide a country-product matrix," said the EPC representative on condition of anonymity said.

Teaotia refused to raise the current incentive rates for exporters under the scheme, holding that the foreign trade policy (2015-20) is fairly new and has been drawn up after extensive discussions. “Teaotia said that with the changing paradigms/dynamics of the export market, exporters should be flexible in responding to the changing economic scenario and should work in the spirit of give-and-take wherein getting access has to be complemented by giving access to markets," a commerce ministry statement said.

Teaotia also assured exporters that the commerce ministry will soon roll out an interest subsidy scheme for providing cheaper rupee credit to exporters. Mint reported on Monday that the Union cabinet was set to clear an interest subsidy scheme for exporters for a period of five years, after the finance and commerce ministries resolve differences over the matter.

The interest subvention scheme, through which government makes cheaper rupee credit available to exporters, expired on 31 March 2014, along with the five-yearly foreign trade policy. After the National Democratic Alliance government took over in May 2014, it engaged in extensive consultations with stakeholders and finally announced a new trade policy for 2015-20 on 1 April this year and promised to quickly relaunch the interest subsidy scheme. However, the commerce and finance ministries could not agree over the tenure of the scheme.

India’s merchandise exports contracted at the quickest rate in five months in August, as shipments of petroleum products continued to decline on lower crude oil prices and external demand remained weak amid a tepid global economic recovery.

Data released by the commerce ministry showed exports contracted 20.7% to $21.2 billion and imports shrank 9.95% to $33.7 billion during the month, leaving a trade deficit of $12.5 billion.

Citing falling import demand and lower commodity prices, the World Trade Organization (WTO) on 30 September lowered its forecast for world trade growth in 2015 to 2.8%, from the 3.3% forecast in April, and reduced the estimate for 2016 to 3.9% from 4%.

“If current projections are realized, 2015 will mark the fourth consecutive year in which annual trade growth has fallen below 3% and the fourth year where trade has grown at roughly the same rate as world GDP (gross domestic product), rather than twice as fast, as was the case in the 1990s and early 2000s," WTO said in a statement.

India aims to take exports of goods and services to $900 billion by 2020 and raise the country’s share in world exports to 3.5% from 2% now. Exports during the past four financial years have been hovering at around $300 billion.

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Published: 08 Oct 2015, 12:18 AM IST
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