New Delhi: The government on Tuesday announced incentives worth Rs 450-500 crore to promote exports of over 2,000 items and aggressively tap the big markets of Japan and China.
The burden for providing these sops, which are aimed at sustaining the growth momentum for exports, will be borne by the internal budget of the Commerce and Industry Ministry.
As part of the package, fiscal incentives like duty free entitlements would be provided to more products including auto component, electronics, plastics, machinery and chemicals, and also for exporting goods to Japan and China.
>"We hope these (incentives) will give a further boost to exports...will also help in recovery of the sectors which continue to show decline in exports," Sharma said, adding the incentives would come in force retrospectively from January 1.
After remaining in the negative for past thirteen months, exports turned positive in November and December following demand recovery in some of the major economies.
The incentives to exporters come at a time when the Finance Ministry has opined against the possibility of providing fresh stimulus and is likely to focus on curbing
fiscal deficit during the forthcoming budget.
>"Too much of stimulus, when the body is getting healthy, is not good, it can be injurious to health," Finance Secretary Ashok Chawla had recently said.
Sharma, however, advocated cautious approach saying "as of now it would be premature to consider withdrawal of stimulus."
The industry, including apex export chamber Federation of Indian Export Organisations (FIEO), welcomed the decision saying it would help in addressing the issue of adverse trade balance with China and Japan.
"Inclusion of China and Japan in the Market Linked Focus Product Scheme (MLFPS) will help in addressing adverse trade balance with these countries which is becoming a cause of concern," FIEO President A Sakthivel said.
China and Japan, which together account for USD 68.79 billion of India's trade, have been added to the list of MLFPS, thus taking the number of such countries to 41. Under the scheme exporters get incentives equal to two per cent of their shipment's value.
The sectoral package also include expansion of the Focused Product Scheme (FPS) to include 112 more products and Special FPS to 113 additional items under which exporters get 2 to 5 per cent incentives.
Also 1,837 new products like machine tools, three wheelers, electrical and power equipment would be now eligible for two per cent export benefits under the MLFPS.
Meanwhile, FICCI urged the Finance Minister to consider the industry demand for providing interest subsidy to additional sectors like engineering goods and chemicals.
Sharma also said he has taken up the issue of extension of interest subsidy of two per cent and lower interest rate on export credit.
PTI
First Published: Tuesday, January 12, 2010, 21:13