Indian exporters struggling to survive the disruptions caused by the Covid-19 pandemic may soon get some relief if an incentive package being worked out by the Commerce Ministry gets final approval.
“There are hectic meetings going on in the Commerce Ministry to work out a suitable package to bail out exporters. It is likely to comprise higher incentives on existing schemes, extension of interest subsidy, amnesty on defaults and sops for the farm goods sector,” an official aware of the development told.
The Prime Minister’s Office has asked all Ministries and Departments to suggest measures to support their respective sectors in the current economic downturn brought on by the Covid-19 lockdown in the country and world over.
“The exporters’ package being put together by the Commerce Ministry will be examined by the Finance Ministry and the PMO before it is approved. As the government’s resources are constrained because of a dip in tax collections, all expenditure is being strictly monitored and approved at the highest level,” the official said.
Exports down 34.6 per cent
Exports from India witnessed a sharp dip of 34.57 per cent to $21.41 billion in March 2020 as orders started declining due to the global pandemic. The overall decline in goods exports in 2019-20 was 4.78 per cent at $314 billion.
In April-May 2020, exporters fear that the situation is likely to further deteriorate as the nation-wide lockdown from March 25 and a large-scale cancellation of global orders have paralysed exports.
“Exporters from diverse sectors, be it textiles, garments, handicrafts, leather or engineering items, have been seeking relief, such as higher sops and easier credit, to survive the crisis,” the official added.
While the Commerce Ministry has already said the popular Merchandise Export Incentive Scheme (MEIS) will continue at least till December 2020 and may even be extended beyond that date, the exporters’ package could include higher incentive rates under the scheme.
“The government plans to phase out the MEIS scheme as it is not compliant with WTO norms, but it is holding on to it temporarily during the ongoing crisis and a proposal to increase the incentive rates is being looked into,” the official said.
Apart from examining the need to extend the interest subsidy scheme for exporters called the `interest equalisation’ scheme, beyond March 31 2020, and enhancing the rates, the Commerce Ministry is also considering an amnesty scheme for non-fulfilment of export obligation.
“There is big demand from exporters for an amnesty scheme as many beneficiaries of certain export promotion schemes have not been able to fulfil their export obligations due to fall in global demand,” the official said.
Agriculture exports, which have witnessed a surge in demand during the pandemic, may also attract some incentives, he added.