In a bid to boost sagging exports and bridge a widening current account deficit, the government is likely to come out with a new tax reimbursement policy for exporters in the upcoming Foreign Trade Policy.
Senior officials of the finance and commerce ministries held a meeting last week to understand the impediments faced by the exporters. Finance minister P Chidambaram has already underlined the need to introduce measures to boost exports.
“We are looking at ways by which exports can be given a push even in the given circumstances where European and US markets are still uncertain,” a senior finance ministry official told HT on the condition of anonymity.
Earlier, exporters enjoyed the benefit of the Duty Entitlement Pass Book (DEPB) scheme — a export and tax-saving initiative — which was later withdrawn and replaced by the more time-consuming Duty Drawback Scheme.
Chief economic adviser Raghuram Rajan has also said that steps must be taken immediately to boost exports. “We must remove roadblocks to increase exports and we may see some measures in the Foreign Trade Policy.”
Overseas shipments declined by 4% to $265.95 billion during the April-February period of the current fiscal year while imports grew by 0.25% to $448 billion during the period, leaving a trade deficit of $182 billion. However, in a silver lining, exports rose by 4.25% to $26.26 billion in February.
Exports have slowed down drastically despite a falling rupee, said Anil Bhardwaj, secretary-general, Federation of Indian Micro and Small & Medium Enterprises (FISME). “We need to understand why exports have slowed down even though rupee has depreciated, since ideally it should be doing well. There are several roadblocks and the government must look into them and ensure that the cost of carting goods to the ports from inland areas is competitive.”