Govt extends 2 % interest subsidy for exports for one more year
The Central Government has announced a number of incentives to control the decline in exports, which will fall short of the $360 billion target set for the current fiscal. It has extended the 2 % interest subsidy scheme offered on exports, which was due to expire in March 2013, for one more year.
As part of the incentive package, the government announced the introduction of a pilot scheme of 2% interest subvention for project exports through EXIM Bank for countries of SAARC region, Africa and Myanmar.
Why this incentive?
The Indian exports, majorly merchandise, are facing a decline due to economic slowdown and fall in demands. The interest subsidy is expected to make Indian exporters more competitive in foreign markets. India is already under pressure due to widening trade deficit which touched $175.5 billion between January-November. The objective of the scheme is to boost exports to these countries by providing long-term concessional credit through EXIM Bank as co-financing in infrastructure sectors such as housing, irrigation, road projects and renewable energy.