In a move to boost exports, the government on Wednesday raised the rate of interest on subsidy scheme for exporters to 3% from the current 2% and widened the coverage of the scheme to cover more sectors. The finance ministry provided additional funds of R2,000 for this, over and above the earlier allocation of R1,550 crore, which was mainly used to fund the last year's subvention demand of over R1,200 crore.
This assumes significance in the wake of India's merchandise exports declining 1.4% to $ 72.46 billion in the June quarter, besides showing the highest decline in eight months at 4.57% to stand at $23.78 billion in June.
“The rate of interest subvention from Thursday, which would be available to exporters, would be enhanced to 3%. The government is making available the required resources to clear all claims of the exporters and the provisions are being made to ensure that claims of the all the exporters are settled forthwith,” said commerce and industry minister Anand Sharma.
Sharma had taken up the issue with finance minister P Chidambaram on July 26.
At present, all exporters who are micro and small enterprises, irrespective of the export sector, are beneficiaries of this scheme.
This will benefit engineering exports as almost 235 tariff lines in engineering products will be eligible for interest subvention now. Engineering exports have declined by 7.50 % in the first quarter of the current fiscal while in June the shipments were down 9.26 %.
“It will help in reducing the cost of credit and adding to competitiveness of exports. Delays in grant of exports benefits has affected the liquidity of exporters and announcement to settle all pending claim forthwith will help the export sector to tide over liquidity problem to some extent,” said M Rafeeque Ahmed, president, Federation of Indian Export Organisations. Besides, the government is also considering raising the plan allocation for Market Access Initiative (MAI), Market Development Assistance and Central Assistance to States for Developing Export Infrastructure and other Allied Activities (ASIDE) Scheme.
The commerce ministry, he said, has called a meeting of Board of Trade (BoT) on August 27 to consider more steps to boost exports.