Exporters to get Rs 325 cr in direct aid

NEW DELHI: Exporters, hit hard by global slowdown, will now be able to get direct government assistance under a Rs 325-crore special package announced by commerce minister Kamal Nath as a part of the foreign trade policy.

The package that comes into effect from April 1, 2009, would allow exporters from leather, textiles among others, to avail incentives in form of duty-free scrips which could also be encashed. Scrip is a substitute for currency and is often a form of credit.

The detailed contours of the package would be announced over next few days, director-general of foreign trade R S Gujral said. The government may also expand the coverage of the scheme to include some more sectors.

The Rs 325 crore provided for the package is only for the interim period of four months of the current financial year.

Textiles exports witnessed an over 30% decline while leather exports fell by 12% in January.

The special incentives will be on the lines of the existing focus product and focus market schemes where duty-free scrips (for imports) are provided on export of identified items to niche markets.

The scrips, under the new scheme, will carry a maximum value of 5% of a particular export contract and would be given for exporting to existing markets like European Union, US and Japan, economies where demand has been hit the most. The percentage of the relief would vary in accordance with the market and product.

The market to which a product is being exported will also determine the level of relief being given by the government. If a particular product is facing a tougher time in penetrating the US market than other markets, the sop for exporting it to the US will be more than exporting it elsewhere.