New Delhi: The commerce ministry on Thursday announced incentives valued at around Rs 800 crore to boost Indian exports to emerging markets in Asia, Africa and Latin America.
As a part of the supplement to the foreign trade policy 2009-14, commerce minister Anand Sharma announced a Special Bonus Benefit Scheme to provide assistance to emerging export sectors including engineering, pharmaceuticals and chemical for the next six months to March. The plan will cover 50 products and provide duty credit of 1% on the total value of exports, which can be used to offset their import duty payments.
“Because competition is very high in these sectors, we are providing this special incentive so that exporters can capture new markets,” said director-general of foreign trade Anup K. Pujari.
The latest move comes at a time when India’s merchandise trade has shifted in favour of the developing economies in the past six years. While the combined share of the US and the European Union as destinations of Indian exports has declined to 30% in 2010-11 from 40% in 2004-05, India’s shipments to Asian economies have jumped to 54% in 2010-11 from 47% in 2004-05, signalling a greater integration with Asian nations.
Similarly, the EU and North America are losing their importance as sources for Indian imports and countries such as South Korea and China are gaining ground.
Within the Indian exports basket, share of traditional items such as textiles, gems and jewellery, leather and farm products is declining, while the share of engineering goods, petroleum products and electronic items is rising.
To increase competitiveness in regions such as Latin America, Africa and Commonwealth of Independent States countries, a special focus market scheme has been introduced covering 41 countries in these regions. Cuba and Mexico are new entrants into the list. The scheme would provide additional 1% duty credit over and above the 3% duty credit available under the current focus market scheme.
While the ministry has desisted from doling out sector-specific incentives, it has made an exception for apparel and has extended the 2% duty credit under the market-linked focus product scheme for apparel exports to the US and the EU. Pujari said this is intended to capture the US and the EU markets during the Christmas season.
Sharma also announced the inclusion of 130 additional items under the focus product scheme from sectors such as chemical, pharmaceuticals, textiles. handicraft, engineering and electronic goods under which exporters will avail 2% duty credit of total value of exports.
The package of measures announced by the minister would help Indian exporters in the current challenging global environment, said Rajiv Kumar, director general of industry lobby Federation of Indian Chamber of Commerce and Industry.
Kumar expressed satisfaction that the government has continued with the strategy of diversification of the export products basket, market diversification towards non-traditional destinations and reduction in transaction costs through procedural simplifications.
“The exporters’ community would now wait for the announcements regarding extension of zero duty export promotion capital goods scheme and Status Holders Incentive Scheme which will supplement today’s set of incentives, he said.