The ministry added around 2,000 items to its list of articles eligible for export subsidies, a move expected to cost around Rs 450 to 500 crore by end-March.
After much preview and promises, the ministry of Commerce and Industry on Tuesday announced extra sops to select export sectors, exhausting its budgetary allocation for the financial year with over two and a half months to go.
The ministry added around 2,000 items to its list of articles eligible for export subsidies, a move expected to cost around Rs 450 to 500 crore by end-March.
“We had said, at the time of announcing the foreign trade policy (first installment of sops) that we will do a mid-term review to examine the possibility of extending more sops,” Anand Sharma, minister for commerce and industry, said.
In August this year, the minister had announced a series of benefits to the export sector that were seen as lending support at the time of global instability and a steep drop in India’s total exports. The benefits were primarily to be disbursed in the form of scrips issued to exporters based on the value of their exports.
These scrips could then be sold for cash to importers who could submit the scrips to the customs authorities instead of paying import duties.
On Tuesday, the minister increased the percentage value of such indirect export subsidy from 2% set in August to 5% for some items. In August, he had increased the figure from 1.25% to 2%. In addition, he also brought in 112 new items into the eligibility list for receiving such subsidies and another 1,837 products into a destination-linked subsidy programme.
“We believe that if and when the support schemes are to be withdrawn, they should be done only in the sectors that are performing well,” Sharma said, hinting at restlessness in the finance ministry which wants to curtail the export support schemes.
Sharma feels the recovery in the global market is too nascent to start thinking of winding back the so-called ‘export stimulus’ packages.
Among the products whose subsidies have been increased from 2% to 5% are hand tools, parts of agriculture & horticulture machinery, sewing machines and parts, liquid pumps, nuts, bolts, washers, screws, staplers, and parts of machinery for soldering, brazing and welding.
The sectors that have been newly brought into the 2% subsidy scheme include engineering, electronics, rubber, chemicals, plastics, carton boxes and egg powder.
The sectors that have been newly made eligible for a 2% subsidy if they are exported to certain priority markets include machine tools, earth moving equipments, transmission towers, electrical and power equipments, steel tubes, pipes and galvanised sheets, compressors, iron and steel structures, auto components, three-wheelers and cotton woven fabrics.
Interestingly, Sharma also added China and Japan to the list of priority markets for which exports would be eligible for subsidies. “These are two important markets against which we have huge trade deficits,” he said.
It is not known whether the commerce ministry’s budget allocations for next fiscal will be enough to sustain the new schemes into 2010-11. Sharma said all the schemes are being announced on a continuous basis, except for the inclusion of the chemical industry into the 2% bracket.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
)
)
)
)
)
)
)
)
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}