Mumbai, July 02: With India's exports declining for
the eighth running month in May, the government may consider
converting the US and the Europe into focussed markets, a
senior government official said.
"We have been trying to help exporters diversify their
markets in the last few months. There is a need to arrest
decline in exports... we may have to convert the US and Europe
into our Focus Market Scheme," Director General of Foreign
Trade R S Gujral told exporters in an open-house meet
organised by the Federation of Indian Export Organisations
(FIEO) here today.
Introduced in April 2006, the Focus Market Scheme (FMS)
aims to offset high freight cost to certain select
international countries with a view to make India more
competitive in those markets.
It allows duty credit of 2.5 per cent of FOB (free-on-
board) value of exports to countries that are identified as
Focus Markets by the Government.
Contracting for the eight month in a row, India's
exports declined by 29.2 per cent in May over the same period
last year as overseas shipments took a hit due to the economic
slowdown in major markets like the US and Europe.
Exports dropped to USD 11.01 billion in May from USD
15.55 billion in the same month last year.
Eight Latin American nations as Argentina, Chile,
Bolivia, Ecuador, Paraguay, Peru, Uruguay and Venezuela have
been notified by the government. In Africa, 49 countries
qualify for benefits under the scheme.
Assuring all help to the beleagured exporters, Gujral
said that a turn around in exports could take up to another
5-6-months.
On the textile sector which has been badly impacted by
the global economic downturn, Gujral said there is a need for
cost-cutting in the wake of increasing competition from
Bangladesh and Vietnam.
"If we are not competitive against Bangladesh and
Vietnam, then there is no use sustaining (trade) on Government
sops," Gujral said.
DGFT may release its new Free Trade Policy (FTP) in
August for 2009-14 and solicited policy inputs from exporters.
Accordingly, exporters requested that petroleum products be
included in the Market Linked Focus Scheme to boost exports.
At present, petro-products constitute 17 per cent of the
total exports from India.
They have also sought Special Economic Zones (SEZs) to be
categorised as infrastructure and not real estate. SEZs
classified as real estate carry a risk weightage parameter for
banks under RBI's Basel II norms, rendering credit flow from
banks to SEZs dearer.
Gujral said he has taken up certain issues with the
Finance Ministry and hopes to get respite in some sub-sectors
in the forthcoming Budget.
Bureau Report