In order to allay concerns of domestic exporters over the withdrawal of preferential import duty scheme by European Union (EU), the Commerce Ministry is considering fresh incentives to help these sectors retain their competitiveness. The European Union (EU), India’s largest export market, has removed its preferential import duty scheme for some Indian products from 2014.
Till now, the EU’s generalized system of preferences scheme allowed duty-free or low-duty access for specific products in all 27 of its member countries. The withdrawal of preferential duty scheme is likely to impact country’s exports of various products including chemicals, textiles, minerals, raw hides & leather and automobiles including road vehicles, bicycles, aviation, space, boats and their parts. On becoming globally competitive these products have been removed out of the preferential duty advantage list, which is a big blow for the country. Meanwhile, the Ministry is looking at the option of providing cash incentives to the affected sectors under the existing Market Linked Focus Product Scheme giving cash benefits to exporters of specific products to specific markets, generally ranging between 2 percent and 5 percent.
The European Union (EU) accounts for around 16 per cent of the country’s total exports. During April-November 2013, India exported goods worth $33.27 billion to the 27-member bloc, recording 3.5 percent growth from a year earlier. India along with China were the top beneficiaries of the preferential duty scheme which provides preferential market access to exports from 90 developing and least-developed countries. Further, a number of countries, which have been graduated out of the scheme this year include Argentina, Brazil, Cuba, Uruguay, Venezuela, Russia, Kazakhstan and Malaysia.