NEW DELHI: The ministry of commerce and industry will seek additional funds for the newly announced Export Promotion Mission (EPM), once the umbrella scheme that will absorb various export promotion initiatives gets approval from the Cabinet.
“Under EPM it (department) is working to carve out an umbrella scheme with various components in consultations with the Ministry of Finance and Micro Small and Medium Enterprises (MSMEs). Once the cabinet approves the scheme, additional funds required will be sought from the Department of Expenditure,” the Department of Commerce informed the standing committee of Parliament on Commerce.
The EPM which was announced in the latest budget has an outlay of Rs 2250 crore. Interest Equalisation Scheme (IES), Lab Grown Diamonds (LGD) and Market Access Initiative (MAI) have been subsumed in the EPM. Of the total allocation Rs 200 crore is for Market Access Initiative (MAI) and Rs 50 crore is for lab grown diamonds. The remaining is for IES.
The committee noted that Rs 2250 crore is a very small amount in view of the objectives of EPM at hand which also includes addressing issues related to high cost of finance and logistics, issue of credit worthiness, support and protection from non tariff barriers, issue of getting various certificates and licenses. The Department should reassess the requirement of funds and seek additional funds at Revised Estimates stage, it said.
The IES has not been renewed beyond December 31, 2024 while the MAI also remains suspended. The Parliamentary committee has also recommended that both IES and MAI should continue till the EPM becomes operational.
“Cost of finance and logistics still remain comparatively high in India in comparison to its competitors. The IES provided some succor to the exporters, by compensating for the high cost of export credit. However, the withdrawal of the Scheme and its merger with EPM , which is still not operational, is going to adversely affect the Indian exporters,” the committee said in its report..
In India, the Repo Rate stands at approximately 6.25%, with exporters bearing interest rates ranging between 8 to 12% or even more due to high spread of the AD Banks which makes the country’s exports uncompetitive vis-a-vis competitor countries, it said.
The committee noted that around 85% of the applicants availing the scheme benefits are MSMEs. Back of the envelope calculation estimates that every rupee support provided through this scheme by the government has resulted in a rise in export revenue by Rs 2.84, a 184% increase.
“The Committee would have ideally preferred continuation of the Scheme. However, if a new scheme is being envisaged, the component of Interest Equalisation must be duly incorporated with adequate allocation of funds,” the standing committee said.
As the IES ran only for three quarters of this financial year, the department has spent Rs 2482 crore on it which is much lower than the spending of Rs 3699.9 crore in 2023-24.
The committee also noted that there has been consistent 100% utilisation of funds under the MAI. This may also be an indication, that if more funds are allocated, that also may get utilised for providing market access to Indian exporters. “The sudden withdrawal of this scheme and its merger with the EPM, which is still at planning stage, may adversely impact the ongoing efforts of the Department. The Committee recommends that the Scheme be continued till various components of the EPM are finalized,” the report added.
Source: The Financial Express
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