Countries categorised into two: Those with which deficit is $5 bn-plus & those with gap of more than $10-bn
NEW DELHI : Concerned over the sharp dip in export growth in recent months, the Commerce Ministry is exploring the possibility of a special incentive package for exports to countries with which India’s trade deficit is very high.
According to official sources, Ministry has identified two sets of countries those with which India's trade deficit is more than $5 billion and those where this deficit is more than $10 billion. The idea is to formulate separate sets of incentives for exports to these two categories of countries, in keeping with the target to achieve 20% growth in exports this year, despite the stagnation in world trade. India's exports grew 21% in 2011-12, despite the demand slump in traditional markets like the US and Europe, thanks to the high growth registered in other markets (Asia, Africa and Latam).
While China, Switzerland, Saudi Arabia and Iraq, along with four others fall in the greater than $10 billion trade deficit category, the US, Singapore and the Netherlands are a part of the other group.
“The Directorate General of Foreign Trade has looked into the data for the period April 2011-January, 2012. It found that India’s trade deficit is greater than $10 billion in respect of eight countries,” said a Commerce Ministry official.
The recent removal of $700 per tonne minimum export price (MEP) or floor price on basmati rice shipments and onions were a part of boosting exports to such countries. Last month, as part of the annual review of the foreign trade policy, Commerce Minister Anand Sharma announced a slew of measures to boost exports, including allowing duty-free scrips to be used for procurement of goods from domestic market for payment of excise duty and extending export benefits for e-commerce.
“This is a continuous exercise and by looking into India’s trade performance with countries as well as with various sectors necessary remedial steps, if any, are devised,” the official added.
Sectors like petroleum oil and lubricants along with gems and jewellery account for a third of India's exports while plastics, electronics, chemicals and drugs and pharmaceuticals account for another one-third.
India's exports contracted 4.16% year-on-year in May to $25.68 billion compared with $26.79 billion in the year ago period. Exports have declined for a second time this year after a fall of 5.7% y-o-y in March.
According to the Ministry, the country's shipments in April-May 2012-13 declined 0.69 % to $50.13 billion from $50.48 billion in the same period last year.