Sops in the offing to boost falling exports
Dec 11 2012 , New Delhi
Commerce secretary S R Rao said on Tuesday the government would come out with a new booster package. “We are awaiting a final confirmation from the finance ministry and hope to announce something towards the end of this week,” he said.
Merchandise exports last grew in April, by 3.2 per cent, but have been on a slide ever since. May saw a drop of 4.16 per cent, June 5.45 per cent, July 14.8 per cent, August 9.7 per cent, September 10.8 per cent and October 1.63 per cent.
Rao refused to name the incentives that could come, but it is expected that the two per cent interest subvention will be extended to a few more sectors like engineering. Besides, the additional scrip benefits may be extended to the handful of exporters who have done well even in the current grim scenario.
Trade data released by the commerce ministry indicate goods exports declined by 4.17 per cent in November to $22.2 billion from $23.2 billion last year.
Imports surged in November by 6.35 per cent to $41.5 billion ($39.1 billion). This resulted in a trade deficit of $19.2 billion ($15.8 billion).
In April-November exports contracted by 5.95 per cent to $189.2 billion from $201.1 billion in the corresponding period last year. Cumulative imports contracted by 1.58 per cent to $318.7 ($323.8 billion). Thus, the cumulative trade deficit was $129.5 billion ($122.6 billion).
The ministry hopes the new or extended incentives would arrest the exports decline. Despite the contraction in exports in the last seven months, the ministry continues to stick to the export target of $360 billion this year.
It says there will be a turnaround in the next quarter.
The ministry has estimated a growth of 20 per cent over last year’s exports of $303 billion.
A Sakthivel, chairman of the Apparel Export Promotion Council, said there was no change in the situation in Europe and the US. “The government should ease the procedure to import fabrics. It will help raise textile exports,” he said.
M Rafeeque Ahmed, president of the Federation of Indian Exports Organisation (Fieo), said these latest data reflected the contraction in global demand.
“With the slowdown in global trade, pricing has become a key issue and extension of some fiscal benefit will help exporters to adjust prices,” Ahmed said. He added that exporters were either booking orders at a wafer thin margin or at a loss.