The Indian government has announced a new round of measures to promote exports amid dwindling outbound trade volume and rising trade imbalance.
The measures include extension of a 2 percent interest subsidy on pre- and post-shipment export credit for a further period of one year ending March 2014, and additional concessions on incremental exports. The subsidy scheme, which applies to labor-intensive sectors such as handicrafts, carpets, handlooms, readymade garments, processed agriculture products, sports goods and toys, was scheduled to end on March 31, 2013.
“We are finding it difficult to meet export targets and want to stop and reverse the fall in exports. Year 2012 has been particularly difficult and the government will continue to monitor the situation,” Commerce and Industry Minister Anand Sharma said. “We will make every possible effort to improve exports. It is a matter of priority and concern.”
The government said it has also decided to launch a “pilot scheme” permitting some banks to allow exporters to receive a 2 percent interest subsidy for export of project shipments bound for countries in the South Asian Association for Regional Cooperation (SAARC) as well as Africa and Myanmar.
“The scheme will be operational immediately for a combined worth of $500 million, to begin with, " Sharma said.
According to the latest provisional trade figures, India’s exports fell 5.95 percent year-over-year to $189.2 billion from April through November, the first eight months of fiscal 2012-13. Imports were $318.7 billion, down 1.58 percent from a year earlier. The trade deficit for the eight-month period was estimated at $129.5 billion, compared with $122.6 billion for the same period last year.
The government has set an export target of $360 billion for 2012-13 and $500 billion by 2013-2014.