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Tuesday, Nov 18, 2008
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Centre plans stimulus package for exporters

Sujay Mehdudia

— Photo: Rajeev Bhatt

EXPORT WOES: Kamal Nath at the India Economic Summit in New Delhi on Monday.

NEW DELHI: With the $200-billion export target coming under pressure from the economic slowdown and fear of recession in the U.S. and European markets, the Centre on Monday announced that it was working on a fiscal package for exporters. The export target was also under review.

Minister for Commerce and Industry Kamal Nath said:

“There is a slowdown in the economies in the Western world and there is bound to be a slowdown in exports. The Prime Minister’s Committee, set up to handle the global crisis, will review this.

“We are looking at various measures that can help sustain exports and enable us to meet the targets. Currently our exports are on target and doing fine but things are not looking that good for the coming months and that is the reason we have to prepare a stimulus package for this sector.”

He was addressing journalists at the ongoing three-day India Economic Summit organised by the CII and the World Economic Forum.

Concerned at the spillover effect from the U.S. and European markets, the Commerce Minister said: “I am reviewing the situation to see whether our target will be met or not. Till now, we are on track; but the next five months will determine whether targets are met or not.”

While the Commerce Ministry is pitching for a total tax waiver for exporters, both at the Central and State levels, a decision on this will be taken by the committee chaired by Prime Minister Manmohan Singh.

Mr. Nath indicated that the Ministry and the PM’s committee were working on the package as there were many areas that needed to be addressed. He said there was a case for refunding taxes and levies to exporters so that they could compete in the world market, marked by undercutting by exporters from other countries which back them.

On their part, exporters seemed desperate for inexpensive credit in a liquidity-starved financial market.

The impact of the global financial turmoil was clearly visible in October, when India’s exports declined by 15 per cent.

The government has set a target of $200 billion for the current fiscal in the backdrop of $162 billion in 2007-08. During April-September, the country registered a growth rate of 30.9 per cent to $94.9 billion.

However, several agencies like global consultancy firm Dun and Bradstreet have expressed doubts whether the growth momentum could be sustained.

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