Export laggards await sops .

New Delhi, June 20: The government plans to provide export sops to labour-intensive sectors such as textiles, leather, handloom and engineering goods, which continue to reel under the impact of the global economic slowdown.

“Though exports have grown 35 per cent in May, much of it is because of the base effect. Once the sectoral review is complete, we should be able to finalise incentives,” commerce secretary Rahul Khullar said.

The May numbers point to the need for help to the exporters of readymade garments and engineering goods. Garment exports had dipped 7 per cent during the month, and the overall outlook for engineering goods looks bleak despite the sector growing 29 per cent.

Officials said the ministry had commissioned a study to identify the problems faced by various segments within engineering.

“The government should set up a technology upgradation fund similar to the one they had for textiles. This had helped textiles to grow rapidly,” Aman Chadha, chairman of the Engineering Export Promotion Council of India, told The Telegraph.

“Such a fund will help the industry to get access to funds at a low cost, which will enable India to move from a low value-added product manufacturer to high-end products given the country’s knowledge base,” he said.

Officials said the sops could contain a mix of fiscal incentives and the simplification of procedures.

“We are looking at providing incentives for venturing into new markets as similar measures have resulted in exports turning positive despite slowdown,” a senior commerce ministry official said.

The euro crisis was being closely watched as the European Union was a major destination for Indian exports.

Exporters want the government to impose a tax on FII inflows as it swings the dollar-rupee value appreciably.

According to A. Sakthivel, president of the Federation of Indian Export Organisations, exporters want bank credit at a uniform rate of 7 per cent and the extension of zero duty export promotion capital goods scheme, which allows duty-free import of capital goods, to all sectors.

Extension of the duty entitlement passbook (DEPB) scheme, under which duty credit is provided to exporters, along with measures to reduce transaction costs and soften the blow of the rupee’s appreciation are some of the measures being considered.

On the possible extension of DEPB, sources said the scheme would only be extended till the introduction of goods and services tax (GST), which is likely on April 1. DEPB, which neutralises the incidence of duties, will expire on December 31. GST seeks to amalgamate all state-level taxes into a single levy, eliminating their cascading effect.

Measures to reduce the transaction cost such as replacing the requirement of filing separate invoices for customs, excise and value-added taxes with a single invoice, are also being considered.

During the April-May period, exports grew 35.7 per cent to $33 billion against the year-ago period. After 13 consecutive months of negative growth, exports have started to look up from November. The government has set a target of $200 billion for 2010-11 against $176.6 billion a year ago.

Source : Telegraphindia