With the economy slowing and an impending general election, Commerce Minister Kamal Nath on Thursday announced 26 measures to promote exports, mostly simplifying foreign trade schemes, even as he lowered the export target for 2008-09 to $175 billion against the $200 billion announced in April 2008.
Thursday's measures follow stimulus packages announced on December 7, 2008 and January 2 this year that included more interest rate subsidies on export loans and enhanced reimbursement of duties.
The big trade facilitation measures in today's package include a longer period to fulfil export obligations on many existing promotion schemes.
For example, duty credit scrips of export promotion schemes, as well as the duty entitlement passbook scheme, will now be issued to exporters as soon as they produce the shipping bill. Earlier, exporters were required to submit bank realisation certificates, which come 10 to 12 months after the export consignments are sent.
The government has also extended the export obligation period under the advance authorisation scheme used by exporters to import duty-free inputs for export goods from 24 to 36 months. Exporters using this scheme have to commit an export obligation of a certain value. But due to fewer orders from overseas markets, exporters were finding it difficult to fulfil commitments under the scheme.
According to trade experts, this move could benefit exporters by up to one per cent of the value of export consignments. "If export obligations were not fulfilled, a request for extension would attract an additional fees. The one-year extension will give them relief," said a trade expert based in Delhi.
Experts said procedural simplifications will increase the marketability of duty credit scrips linked to export promotion schemes. These scrips are traded amongst the exporters.
"Simplifying the rules means that one will have quicker access to the scrips related to export promotion schemes. So the DEPB scheme and scrips of Focus Markets or Focus Product schemes, which are traded amongst exporters, will now have better valuations," said A Sakthivel, chairman of Federation of Indian Export Organisations.
Thursday's announcements, however, did not include any measures on simplifying procedures for service tax refunds for exporters. Government officials said that issue is still being discussed with the finance ministry and a clarification in this regard is likely soon.
The minister also announced a special package for textiles and leather, two sectors that collectively account for 12 per cent of India's exports and have been hit hard by the global downturn. These two sectors will get an additional Rs 325 crore under the Focus Product Scheme, which gives duty credit on imported inputs for exporting to specified countries.