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Interest subvention scheme for exports likely to be revived: Commerce secretary Rajeev Kher |
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NEW DELHI: Exporters will get access to subsidised credit, with the government set to reintroduce the interest subvention scheme for the labour-intensive sectors in the coming months.
"The finance ministry has given us the sanction for extending the interest subvention scheme for exports for three years. We are working out the details of the scheme and hope to be ready with it in two-three months," commerce secretary Rajeev Kher said at a seminar on foreign trade policy organised by industry lobby FICCI on Thursday.
An allocation of Rs 1,650 crore has been made for this in the budget for 2015-16. The 3% interest subvention scheme for exports lapsed in April last year, affecting working capital and margins of Indian exporters. The scheme provides credit to exporters at a subsidised rate by banks, which are later compensated by the government.
"The only thing I can say is that labour intensive sectors will be given prominence," he said. The interest subvention scheme was expanded to 3% from 2% in 2013-14 for sectors including readymade garments, carpet, handlooms, handicrafts, toys, and some engineering products. On the fiveyear foreign trade policy, Kher said that the emphasis of the government this time was to support value-added exports.
Subsidising may be difficult
Warning about the changing global trade scenario, Kher asked the industry to enhance competitiveness at the global level without the support of subsidies. "It is a challenge for us to become competitive in the sense of global competitiveness. We have to acknowledge that we have to become competitive not through the route of subsidies and not through the route of doles," he said.
Citing the World Bank data, he said India's per capita income is $994 and the moment it reaches $1,000 per annum "you lose your entitlement to export subsidies". "The data might show that we have crossed Rs 1,000 limit. If the data lag comes with two years' gap, then by 2017 we should be crossing that stage. So, clearly, we must plan for it," he added.
Kher said that sectors such as textiles which are increasingly recognised as competitive in the global context must start building portfolio and services in a way that they may face this reality as and when it comes.
"India has so far run on its competitive advantage of its products. (But) in the last few years, this competitive advantage has suffered and we have not yet begun reviving it or improving it," Kher said.
He cautioned about the challenges from implementation of regional trade agreements like Trans-Pacific Partnership (TPP) and Trans-Atlantic Trade and Investment Partnership (TTIP), as India is not a party to these.
Kher asked that if the five major markets - the US, Mexico, Canada, Japan and Malaysia - get into a preferential trading arrangement with each other, then "who are you (India)?" "We have to tighten our belts now. We have to acknowledge the institutional architecture which is emerging," he said.
India announced its five-year foreign trade policy on Wednesday, aiming to double overall combined exports to $900 billion by 2019-20.
is keen to re-start talks on the comprehensive free trade agreement, but India may have reservations in meeting EU's ambitions in the pact. "What is the point at which EU will feel satisfied?
In our perspective, we have already arrived at that point and EU should (also) feel satisfied. If EU has more ambitions which it believe should be satisfied now, (then) we might have some reservations," Kher said.
The 28-nation bloc is keen to restart talks on the comprehensive free trade agreement (FTA). Negotiations on the FTA, which began in 2007, came to halt after the April 2013 talks ran into a deadlock. EU has been demanding phasing out of duties on wines and spirits, auto and auto components.
Source : economictimes.indiatimes.com
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