The government with a view to boost exports is expected to announce incentives for exporters in the forthcoming Foreign Trade Policy 2009-14 (FTP) by end of this month. As per the Commerce Secretary S R Rao, the ministry is actively involved in consultations with chambers, export promotion councils, various departments and state governments and is trying to arrive at a package of incentives which would be announced shortly.
Earlier, Finance Minister P Chidambaram in his budget speech too had said that he is looking forward to the changes that will be made to the FTP and had assured his support to measures that will be taken to boost exports.
This time around the focus will on sectors constituting part of the bulk of India's merchandise shipments such as engineering, gems and jewellery and textiles, besides leather, which has declined in the April-January period of the current fiscal, mainly due to the slowing demand in the American and European markets. Special economic zones (SEZ), which are export hubs of the country, may also get incentives along with the FTP. The zones have faced difficult times since the government imposed a Minimum Alternate Tax (MAT) and Dividend Distribution Tax (DDT) in the 2011-12 Budget.
Further, the government as a long-term measure is likely to propose the creation of an Export Development Fund, an incentive for exporters to venture into newer markets. Besides these measures on export front, the FTP supplement is also expected to declare some corrective measures to curb non-essential imports.
Showing some recovery in the global markets, exports for the second straight month in February grew by 4.25$ to $26.26 billion. Imports also rose by 2.6% to $41.18 billion in February, leaving a trade deficit of $14.92 billion. However, during the April-February period, exports declined by 4% to $265.95 billion. Imports grew by a mere 0.25% to $448 billion, leaving a trade deficit of $182.1 billion. On the other hand, the current account deficit (CAD) is headed for a record this financial year, as it has widened to 4.6% in the first half against 4% in the first half of 2011-12.
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