Exports get fillip with interest subsidy
Budget 2018-19 has a financial outlay of ₹2,500 crore towards interest subsidy for the export sector as well as an assurance regarding a liberalised agri-commodities export policy to boost farm shipments.
The ₹2,500 crore outlay for the Interest Equalisation Scheme (IES) on pre- and post-shipment rupee export credit will provide interest equalisation coverage in respect of more than ₹1 lakh crore worth of trade shipment, the government said. The projected medium-term outcome of this move is “improved competitiveness of Micro, Small and Medium Enterprises (MSME) in identified export sectors,” it added. The government had increased allocation for IES from ₹1,100 crore to ₹2,000 crore for the current fiscal.
In his Budget speech on Thursday, finance minister Arun Jaitley pointed out that India’s agri-exports potential is as high as $100 billion against the current exports of $30 billion, and added that “To realise this potential, export of agri-commodities will be liberalised.”
There is also an outlay of ₹500 crore towards investment in Export Credit Guarantee Corporation (ECGC). “The capital infusion will bring the ECGC’s underwriting capacity in terms of maximum liability of insurance covers issued within prudential limits. As on March 31, 2017, this liability exposure was ₹86,232 crore (almost 24 times its net worth),” the government said. Compliance to regulatory norms will enable the ECGC to continue providing its support service to the exporters, it added.
In addition, there is an outlay of ₹330 crore towards the National Export Insurance Account (NEIA). This will enhance NEIA’s under-writing capacity in terms of maximum liability of insurance covers, the government said, adding that the move is aimed at increasing project exports.
G.K. Gupta, president, Federation of Indian Export Organisations (FIEO), said in a statement that digitalised current stock position, scientific forecasting of crop prospects and current demand would help in devising a stable agri-export policy.
The proposal to set up state-of-the-art testing facilities in all the 42 Mega Food Parks will unleash the potential of food processing exports, he added.
He further said the enhanced allocation for Remission of State Levies from ₹1,555 crore to ₹1,855 crore for the current fiscal, and ₹2,164 crore for the subsequent fiscal will not only help in clearing the backlog but could also be used to extend the benefit to carpets, handicrafts and fabrics as well as yarn exports.
The government said exports are expected to grow at 15% year-on-year in 2017-18, adding that goods exports had increased by 5.2% to $275.9 billion in 2016-17. In April-December 2017 (FY’18), exports increased by 12.1% to $223.5 billion from $199.5 billion in the corresponding period of the previous year.
“Indications are that global economic growth is expected to pick up slightly. This can be expected to provide further boost to India’s exports, which have already shown acceleration in the current financial year,” the government said.