New Delhi: Faced with declining exports and widening current account deficit, the government is likely to announce Wednesday a host of incentives for sectors like engineering and textiles to boost shipments amid global demand slowdown.
In its annual supplement of the Foreign Trade Policy (FTP), Commerce and Industry Minister Anand Sharma may extend interest subsidy scheme and provide incentives for incremental exports and special economic zones (SEZs).
"The Minister may also announce some steps to reduce transactions cost which is impacting the exporters. They are likely to get benefits under focus product and focus market schemes. Exporters of environment friendly products could also get some sops," sources said.
During the April-February period, exports declined by 4 percent to USD 265.95 billion on account of global slowdown and negative growth in sectors like engineering and textiles.
Further, the Minister is also expected to come out with new guidelines to revive export hubs, SEZs, which have lost sheen after imposition of certain levies and proposal to take away tax incentives.
SEZ contribute about 30 percent of the country’s overall exports. The government had imposed Minimum Alternative Tax (MAT) and Dividend Distribution Tax (DDT) on SEZs in 2010-11, as against exemptions enjoyed by them from almost all levies earlier.
According to sources, to boost investors confidence in these zones, the government is planning incentives for developers who want to set up SEZs in remote and undeveloped areas.
The government may relax minimum land area requirement for different categories of SEZ, besides extending the benefits of export schemes to SEZ units that are already available to entities outside the zone.
Exports from these zones increased by over 35 percent year-on-year to Rs 3.53 lakh crore during April-December 2012.
The incentives are aimed at helping boost exports and bridging the widening trade deficit, which has touched USD 182.1 billion in the 11-month period of the fiscal. The government has fixed an export target of USD 360 billion for 2012-13, which will not be achieved.
The exports in 2012-13 could be around USD 300 billion, less than USD 307 billion recorded in the previous fiscal.
Last time, in December 2012, the government had announced incentives for exporters that included extension of two percent interest subsidy for one more year till March 2014.
The government had also introduced a pilot scheme of two percent interest subsidy for project exports through Exim Bank for some countries.