In a move aimed at providing relief to exporters affected by the global economic slowdown, the government has announced incentives worth Rs 325 crore for industries including leather and textiles, with effect from April 1, 2009.

Export incentives have already been provided for items such as technical textiles, stapling machine, handmade carpets and dried vegetables, Union minister of commerce and industry Kamal Nath said while announcing the annual supplement to India's foreign trade policy on Thursday.

According to government sources, exports fell for the fourth straight month in January.

In a further trade facilitation measure, the government has extended a provision to reduce export obligations in line with the decline in exports.

Under the Export Promotion Capital Goods Scheme (EPCG), in case of decline in exports of a product by more than 5%, the export obligation of all exporters of that product is to be reduced proportionately. Most exporters have been found lagging in fulfilling their export obligations under the EPCG scheme while availing the benefits of importing capital goods at lower rates of duty.

Export obligations under the scheme for the current fiscal have been extended to the next (2009-10).

The government has also decided to issue duty credit scrips under the Duty Entitlement Pass Book (DEPB) scheme without waiting for realisation of export proceeds, Nath said.

DEPB is an export promotion scheme, which envisages grant of credit entitlement to the exporter at the time of exports at rates notified by the Directorate General of Foreign Trade in relation to the value of exported products.

Harsh Pati Singhania, president of the Federation of Indian Chambers of Commerce and Industry, said de-linking grant of DEPB benefits from realisation of export proceeds would definitely help the industry.

The ministry of commerce and industry has reduced its target for exports during the current fiscal to $170-175 billion, from $200 billion earlier, in view of the slowdown. "I hope we will be able to achieve exports worth $200 billion next fiscal," he said.

"Through the three stimulus packages announced by the Indian government and stimulus packages announced by the governments in the other countries, there will be a pick-up in demand and exports will gather pace," Nath added.

Shaleen Agrawal/ DNA-Daily News & Analysis Source: 3D Syndication