Amid continuous contraction in exports and surge in trade deficit, the Finance Ministry is examining proposals of the Commerce Ministry to provide incentives to exporters to cushion them from the slowdown in western markets.
"There are some proposals which Anand Sharma (Commerce and Industry Minister) has discussed with me. They are being examined," Finance Minister P Chidambaram had earlier said.
The Commerce Ministry, according to an official, has proposed interest subsidy for different sectors like engineering which are reeling under the impact of global economic slowdown.
India's exports fell for the sixth consecutive month in October by 1.63 per cent year-on-year, with trade deficit widening to a record USD 21 billion.
For the first seven months (April-October) of the 2012-13 fiscal, exports have shrunk by 6.18 per cent to USD 166.92 billion.
The economic crisis in the US and Europe is hitting India's exports. Both these markets account for about one-third of country's total shipments.
"The continuous decline in exports has prompted the worried government to think of extending sops for labour intensive sectors like textiles," the official said.
Sharma has recently admitted that the USD 360 billion exports target is difficult to achieve on the back of global slowdown.
"Interest subvention is critical for some sectors, both from the point of view of manufacturing and exports," the official added.
The Director General of Foreign Trade (DGFT) is reviewing the performance of different exporting sectors and is likely to complete the exercise soon.
After that, the government may come out with some support measures for the sector to arrest the decline.