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New Delhi, Feb 8 The commerce ministry has asked its finance counterpart to enhance the rate of subsidy from 3 per cent to 5 per cent on credit provided to exporters, a senior official said today.
Directorate General of Foreign Trade (DGFT) Alok Vardhan Chaturvedi said that in the Union Budget 2018-19, the government has increased allocations for interest equalisation scheme to Rs 2,500 crore from Rs 1,000 crore earlier.
Under this scheme, the government provides 3 per cent interest subsidy to all MSME and labour intensive export sectors.
"The (commerce) minister has taken up with the finance minister for increasing this interest subvention rate from 3 per cent to 5 per cent," Chaturvedi told reporters here.
He said that the cost of capital in India is much higher as compared to other countries.
Besides, infrastructure inefficiencies and logistics costs too are high as compared to India's competitors including Singapore and Malaysia.
Commerce and Industry Minister Suresh Prabhu said that products being sold in global markets need to be at a level playing field.
Interest subsidy to some extent neutralises infrastructure inefficiencies.
Prabhu also said that work is in progress to see ways to increase exports of goods and services to USD 1 trillion in the coming years.
On whether increase in customs duties on certain items could be seen as a protectionist measure, the minister said it is not, and India is one of the most open economies in the world.
Talking about export growth this year, he expressed hope that the shipments would register a healthy growth in 2018-19 as well.
"The trend of export is good. Most of the sectors are doing good," he said.
Briefing reporters, Prabhu said that in 2018-19, the total support extended to exporters would amount to about Rs 1 lakh crore as against Rs 80,000-90,000 crore this year.
In 2016-17, it was Rs 76,980 crore.
The government provides incentives to exporters under various schemes which include advance authorisation, export promotion for capital goods, merchandise exports from India scheme and service exports from India scheme.
Although these schemes do not figure in budget, but they are important part of export promotion programme, he said.
On the proposed agri export policy, he said it would come soon.
The ministry is expected to provide incentives over and above foreign trade policy to promote export of agri commodities.
The minister also said that the Indian economy would touch USD 5 trillion in the coming years and of this USD 2 trillion would come from trade.
He informed that IIFT is working on ways to help exports of goods and services reach that level.