Select export sectors likely to get more sops, fresh review in July.

New Delhi: Exporters of engineering products and handicraft may get more fiscal sops to help them tide over the demand crunch, commerce and industry minister Anand Sharma said. “We will have to tweak those sectors which have not recovered,” Sharma said. He said the Directorate General of Foreign Trade in his ministry would complete a performance review of different sectors in July.

Labour-oriented export sectors like handicraft, jute, engineering goods and electronics registered negative growth in March, despite the country’s overall exports showing 54.1% expansion. Handicraft goods, silk, woolen yarn, fabrics, jute and cotton yarn were among the items that saw the worst decline in exports when the global downturn struck, according to official data. Exports of some jute items—such as yarn—dropped by over 48% from April to January, 2009-10. Export of handicrafts dipped by over 22%, silk by 16.35%, woollen yarn and fabrics by 17.4% and cotton yarn and fabrics by 22.69%, the data suggest.

“It was a tough call because last May, our exports were in deep red, -39.4%,” Sharma said, adding that the export sector has seen a broadbased consolidation. According to a senior commerce ministry official, incentives could be shuffled among different sectors. Those doing well like gems and jewellery may have to vacate some sops for the segments still in trouble.

Exports in the sector—as a whole—were down by about 2% to $17.3 billion from April to January 2009-10, over the same period a year ago. With the revival of demand in Western markets, industry and government officials expect the sector to grow up to $24 billion in 2010-11.

In 2009-10, India’s exports dipped by 4.7% to $176.5 billion from $185.29 in the previous fiscal. Sharma, who is also in charge of the industry department, said consolidation has also taken place in the manufacturing sector. The manufacturing sector, which saw growth dive to 3.3% in March, 2009, had peaked at 18.5% growth in December, 2009. His ministry is working on a plan to give a fresh impetus to the sector. A concept paper on setting up National Manufacturing Investment Zones (NMIZs) has been placed in the public domain.

Some of the suggestions, like giving flexibility to units in NMIZs to downsize the workforce, are considered radical. Sharma said, however, there would be provisions for social safety for the workers.

Source : Financial Express