The UPA government on Thursday announced a host of incentives, including interest rate subsidy and liberalisation of norms for special economic zones, to boost exports.
Commerce and industry minister Anand Sharma announced the measures as part of the annual supplement (for 2013-14) to the Foreign Trade Policy 2009-14.
The government has decided to extend the period and scope of interest rate subsidy provided under the zero duty export promotion capital goods (EPCG) scheme.
“We have decided not only to extend the zero duty EPCG scheme beyond March 2013, but also merge it with 3 percent EPCG scheme. Now the zero duty EPCG benefits will be available to all sectors,” Sharma said.
“We have also undertaken a major simplification of the EPCG scheme,” he added.
The Foreign Trade Policy has two variants under the EPCG scheme - zero duty for a few sectors and 3% duty for all sectors.
Now the government has decided to harmonise zero duty EPCG and 3% EPCG scheme into one scheme which will be a zero duty EPCG scheme covering all sectors.
India's exports dropped by 1.76% at $300.6 billion in the financial year ended March 31, 2013. In the previous financial year the exports had increased by more than 20%.
The country's trade deficit widened to $190.91 billion in 2012-13 as compared to $183.4 billion recorded in the last fiscal.
Sharma said interest subsidy and other incentives provided by the government would help revive exports growth and curb trade deficit.
“We are conscious of the need to enhance exports so that we can address the real challenge of bringing down the trade account deficit, which directly impacts the current account deficit,” the minister said.
President of the Federation of Indian Export Organisation (FIEO) M Rafeeque Ahmed said the incentive measures would help boost export and create new employment.
“Pragmatic announcement on SEZ by reducing the land requirement by 50% and linking it to built up area will renew the interest in SEZ scheme,” Ahmed said.
Chairman of Apparel Export Promotion Council (AEPC) A Sakthivel said the measures would help revive garment exports.
“Measure like expansion of zero duty EPCG scheme, extension of TUFs benefits to EPCG, announcements on promotion of incremental exports and winding the ambit of market and product focus scheme, and extension of interest subvention till March 2014, etc will help in promotion of garment exports from India,” he said.
India's garment exporters are facing tough times due to increased competition from Bangladesh and China in the US and European markets.