New Delhi, Aug. 30: Exporters have demanded doubling of interest subsidy to 4 per cent and the extension of incentive schemes to traditional markets such as the US and Europe following a steep contraction in shipments in July.
Exports contracted 14.8 per cent in July to $22.4 billion — the sharpest fall in three years — because of slack demand in the West.
Ajay Sahai, director-general of the Federation of Indian Export Organisations (Fieo), said a proposal to extend the list of beneficiaries under the interest subsidy scheme had been sent to the commerce ministry.
“Though the benefit is available to small and medium enterprises (SMEs), the government has not extended it to other sectors. We have also urged the Centre to look into the possibility of raising the subsidy to 4 per cent,” he said.
Earlier this month, the government held talks with exporters on steps to boost shipments by exploring new markets while holding on to the traditional ones.
“The government is considering proactive steps to boost exports and some significant policy announcements could be made next month,” commerce ministry officials said.
Fieo has demanded the extension of the focus market scheme to the US and Europe and the creation of a fund to help micro, small and medium exporters gain access to unexplored markets.
A study by the exporters’ body highlighted the need to focus on the existing markets, which still contribute a lion’s share to shipments, besides tapping new ones.
Analysts said an additional effort should be made to hold on to the traditional markets with the help of the government as a long-term strategy.
The annual supplement to the foreign trade policy announced in June included a 2 per cent interest subvention for sectors such as toys, sports goods, processed agricultural products, ready-made garments, SMEs and handloom.
The focus product and focus market schemes, wherein the government gives cash incentives equivalent to 2 per cent of the value of exports, were also expanded with the incorporation of seven new markets and 100 new products. Exports fell 4.16 per cent and 5.45 per cent in May and June, respectively. On a cumulative basis, shipments contracted 1.70 per cent in the first four months of this fiscal.