The government has offered a new incentive package worth Rs 500 crore to exporters

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of 2,000 products under the focus market scheme and the market- linked focus product scheme.

Besides, 112 items have been added to the list of products in the first scheme, and China and Japan to the list of markets in the second scheme.

Announcing this in the capital on Tuesday, commerce minister Anand Sharma said another financial assistance package was under formulation in consultation with the finance ministry.

The latest package includes dollar credit at a concessional rate of Libor plus 100 basis points, continuation of interest subvention of 2 per cent in labour- intensive sectors like textiles and gems & jewellery.

The ministry wants the Reserve Bank of India to direct commercial banks not to insist on remittance of overdue export proceeds for six months. The limit now is one month. But the finance ministry has yet to give its approval.

To bridge the huge balance of trade deficit, the government has included Japan and China in the market- linked focus product scheme. The commerce ministry estimates India’s trade with China at $38 billion in 2007-08, India’s exports accounting for $10 billion. Trade with Japan was $10 billion, including $4 billion worth of Indian exports.

S K Mohanty, a fellow at the Delhi-based think tank, Research and Information Systems, said that Rs 500 crore was not enough to boost exports. The government should have moved away from the traditional markets. “A greater focus should have been given to markets like Argentina, Brazil and South Africa. Japan was hard hit during the recession and the situation there will not improve in the near future,” he said.

The chairman of the Synthetic and Rayon Textile Export Promotion Council, G K Gupta, said the stimulus package would not yield any meaningful improvement for exporters. “The incentive package is nothing,” he said.

Export growth in November and December was positive after persistent declines in the preceding 13 months. Exports last year were worth $160 billion; the target this year is $175 billion.

“We considered it necessary to provide further support, specially to those products whose exports are still not doing well,” Sharma told reporters.

Under the focus product scheme the government added 112 products including plastics, chemicals, electronics and rubber which will get a benefit of 2 per cent of the FOB (freight on board) value of exports to all markets.

“We welcome the move but I am not convinced that these steps will help our bottom lines significantly,” the chairman of the Plastic Export Promotion Council, Manoj Agarwal, said.

Another group of products, including machinery, sewing machines and nuts & bolts, will get a higher benefit of 5 per cent of the FOB value. Sesame seeds and minor coconut products have been added under the Vishesh Krishi and Gram Udyog Yojana scheme. These measures would be effective from Wednesday and the burden would be borne by the ministry.

The president of the Federation of Indian Export Organisations, A Sakhtivel, said the decisions would help but the garment sector should have been included in the market- linked focus product scheme.

Ficci president Harsh Pati Singhania said that the steps would help exporters make a turnaround.