Exporters may land sops to explore new territories

NEW DELHI: With established export markets such as the US, the EU and Japan expected to contract further this year, the government is looking at fresh benefits for exporters to explore new markets such as Africa, Latin America and west Asia.

���We have had talks with the finance ministry on giving incentives for developing new markets for identified products. Some sops are likely to be announced in the foreign trade policy,��� a commerce department official told ET on conditions of anonymity.

The commerce department has asked the finance ministry for more funds to finance the incentive scheme.
ET recently reported that the government is planning to merge two existing schemes that incentivise export of niche products and to niche destinations to make export of labour-intensive products more competitive in traditional markets and increase exports to new destinations (���Niche schemes may fuse to push exports���, July 20, 2009).

There were unexplored export opportunities like pharmaceuticals for South America and engineering products for west Asia, the official said.

���We are thinking of developing new markets for mostly labour-intensive products such as leather, textile, gems & jewellery, engineering goods and pharma,��� the official added.

International Monetary Fund (IMF) and the World Trade Organization (WTO) have forecast that world trade is expected to shrink by about 10% in 2009 with maximum contraction in developed markets.

While the Union Budget announced last month had incentives for exporters including the continuation of several existing sops beyond their cutoff dates, exporters are hoping for more from the foreign trade policy, which lays down guidelines and incentives for importing and exporting goods and services from the country.

The government has two schemes for exploration of niche markets, called focus market, and special products, called focus product. The schemes allow exporters incentives worth 2.5% of the value of exports.

This is in the form of duty-free scrips ��� these can be used to import goods duty-free ��� that can be sold in the market in case the exporter does not want to use it.

The new scheme proposed for deepening presence of identified products in the new markets is expected on similar lines. Exporters, however, have demanded a higher incentive worth as much as 5% of the value of exports.