Commerce minister Nirmala Sitharaman on Tuesday sought immediate approval of interest subvention scheme, lowering cost of capital for exporters, increase in EXIM Bank’s capacity for export projects and restoration of tax benefits to special economic zones to provide cushion to exporters, reeling under the slowdown in global demand.
Listing out its priorities to stem fall in exports, which fell 20.66 per cent from a year earlier to $21.26 billion in August 2015, registering fall for the ninth straight month, the commerce ministry made a presentation to finance minister Arun Jaitley and sought his ministry’s intervention in disbursing interest subvention while also increasing its outlay to Rs 2,200 crore for current fiscal against the Rs 1,650 crore provided for in the Budget. The meeting was attended by the commerce secretary, DGFT, revenue secretary, and chief economic advisor.
“The minister asked for an increase in the corpus of National Export Insurance Account to Rs 4,000 crore along with adequate budget for export infrastructure in view of the reduction in amount of ASIDE scheme from Rs 800 crore to Rs 50 crore in 2015-16,” an official source said.
Elaborating on the reasons for the consistent decline in exports, the commerce ministry said that the main reasons for the decline include slowdown in global demand, sharp fall in crude prices, fall in commodity prices such as gold and copper, currency fluctuations including depreciation of Euro, Rouble, Brazilian Real and Yuan, and the slowdown in Chinese economy.
The commerce ministry also said that the government should focus on leveraging potential for services, such as tourism, which has potential of $75 billion per annum and education.
Worried over the abysmal performance of exports, commerce ministry has called a meeting of exporters on October 7 to discuss ways of containing the dip. The concerns also arise from the fact that now exporters are not confident of achieving even last year’s target as there is unlikely to be any upward trend in global demand any time soon. Last year the exports stood at $310.53 billion while imports were at $447.54 billion. The commerce ministry aims to take goods and services export to $900 billion by 2020 and increase India’s share in world exports to 3.5 per cent from 2 per cent.
“The commerce ministry also urged the finance ministry to help make SEZs a hub for Make in India by restoring MAT and DDT benefits to these units and permitting the export to domestic tariff area at most favourable FTA rate,” the official said.