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Supplement to foreign trade policy: 7-point agenda to boost exports

The government has unveiled a seven-point strategy, including extension of import-tax waiver and interest subsidy, to boost India's merchandise exports that have been hit by sluggish demand from Europe and US.

The annual supplement to the five-year foreign trade policy announced on Tuesday enlarged the scope of tax benefits on imported inputs to include goods sourced locally, aimed at incentivising domestic manufacturing while encouraging import substitution.

It also extended the interest subsidy scheme on labour intensive exports by a year to March 2013; declared seven countries as focus markets; offered special sops for export units in the North-East; and made e-commerce and courier exports out of Delhi and Mumbai eligible for the export benefits.

The package will help achieve the target growth of 20% over the previous fiscal's $303 billion exports despite a weak start, commerce and industry minister Anand Sharma said after releasing the supplement.

"The coming two months can be very testy, but we are working with a plan," Sharma said in defence of his steep 20% exports growth target for the year.

Exports rose only 3.2% in April from a year ago. The foreign trade policy 2009-14 has set a target of $500 billion exports in the terminal year.

"We are on track to achieve this feat as Indian exports registered a 20.9% growth to $303 billion last year despite the Euro zone crisis," Sharma said without putting a number to the exports sops announced.

He said by August the situation should improve.

Under many of the ongoing export promotion schemes, the government provides duty-free scrips to exporters on the basis of their exports, which can be used to pay customs duty on goods imported by them.

These scrips can now be used to pay excise duty on domestically sourced inputs as well, which is expected to encourage import substitution that will help bring down the trade deficit, pegged at nearly 10% of GDP in 2011-12.