NEW DELHI: The finance and commerce ministries have not yet found common ground on exporter sops a week before the foreign trade policy is to be announced. While the finance ministry has not yet given its consent to the popular interest rate discount scheme, fearing it can be a serious drain on the exchequer, the commerce ministry is not willing to give up on its cheaper credit demand.
A number of meetings on sops are expected between top officials of the two ministries over the next few days.
“The finance ministry has not yet given its consent for the interest subvention scheme but we are obviously not giving up. Negotiations on the number of sectors to be covered are expected over the next few days,” a commerce department official told ET.
Commerce and Industry Minister Anand Sharma, who convened a meeting of the board of trade comprising senior industrialists on Friday, said there was a need to give a differential rate of credit to exporters to lift investor sentiments. “We want it (interest subvention) to be re-instated,” Sharma said, adding that the RBI had its own set of compulsions.
Sharma, however, confirmed that there would be incentives for exporting goods to specific markets. “We will be taking all factors into consideration while announcing the continuity or addition of certain schemes for providing access to markets to support our exports,” Sharma said.
The minister said it was important to maintain thrust on exports to contain trade deficit and achieve an export growth target of 20% during the fiscal. Exports in April 2012 posted a growth of just 3.2% to $24.4 billion, compared to April 2011 while in the previous month growth had turned negative.
The finance ministry did not extend the interest subvention scheme for select labour-intensive sectors, including the small and medium industry, when it lapsed on March 31 2012 primarily because of budgetary constraint.
The scheme, which offered finance to selected exporters at a 2% discounted interest rate, had an outlay of more than Rs 1,000 crore in the previous year. “Claims are still being filed, so it is difficult to specify an amount,” the official said.
Exports Grow Just 3.2% in April
India’s exports grew by a mere 3.2% year-on-year to $24.4 billion in April 2012 mainly due to demand slowdown in western markets likeEurope. Exports stood at $23.6 billion in April last year, according to data released by the Commerce Ministry here on Friday. Imports during the first month of the current fiscal grew 3.8% to $37.9 billion, leaving a trade deficit of $13.4 billion. The sectors which registered healthy export growth in April include engineering, electronics, pharmaceuticals and chemicals.