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Anand Sharma seeks fund for new export sops

Commerce and industry minister Anand Sharma will meet finance minister Pranab Mukherjee to persuade him to allocate additional funds for the new incentive schemes for exporters as part of this year's annual foreign trade policy.

While existing schemes that do not have a timeline will be continued with funds allocated to the commerce department in this year's budget, the short-term ones that expired on March 31 2012 can be extended and new schemes announced only if the finance ministry is willing to fund them, a government official told ET.

Incentives worth about Rs 1,700 crore announced in October last year, which included sops for exporting products like textiles, engineering goods, chemicals and electronics to both new and traditional markets, expired last month.

Even the interest subvention scheme that provided 2% subsidy to loans availed by a number of labour intensive sectors also expired last fiscal.

"We have no clue whether the finance ministry will be willing to part with additional funds to incentivise exporters as the government is already straining to control its widening fiscal deficit. It all depends on what transpires between the two ministers when they meet," the official said.

The FM's budget speech for fiscal 2012-13 was silent about the government's intention to give support to exporters.

"It was disheartening to note that the FM did not have anything supportive to say for exporters. Due to the global slowdown, we were expecting a lot in the budget. We certainly hope there is something for us in the FTP," Delhi Exporters Association president S P Agarwal said.

Sharma is expected to make a case for more incentives for the country's decelerating exports by pointing to continued uncertainty in the Western market and growing deficits in the country's trade and current accounts.

Mukherjee had acknowledged earlier this year that the growing current account deficit was a cause for worry and could be controlled only by increasing exports, but he did not mention export incentives as part of the government's plans to bridge the deficit.

The FTP is expected to be announced later this month or early next month.

Existing schemes such as focus product and focus market schemes that incentivise exporters selling new products and venturing into new markets will continue, albeit with small changes.

"There will be no continuity in the FTP if we discontinue existing schemes. Most of the present schemes would continue but we would certainly make changes to exclude products and markets where we have already established a foot-hold and include new ones," the official added.

Weak global demand for goods, especially in Europe, decelerated year-on-year goods export growth in February 2012 to 4.3% at $24.6 billion. Exports in the first eleven months of the fiscal were $267.4 billion, which was higher by 21.4% compared to the previous year.