“Small to midsize export oriented industrial units, plagued by rising costs, need to be able to manufacture more and sell more to reduce overheads. But to do so, they have to spend a lot more on marketing activities, including travelling to new markets such as those in Latin America. Smaller firms do not have the money to do this and this is where the government can step in to help,” said M.Rafeeque Ahmed, president, Federation of Indian Export Organisations (FIEO).
Lower demand from western economies such as the US and the Eurozone, which together account for over 25 percent of India’s exports, are the main reason for a decline in exports, according to news reports.
“For instance, (FIEO) has suggested that funds given out under the Market Development Assistance (MDA) scheme should be more than double the current allocation,” said Ahmed.
Export-related incentives aimed at encouraging exporters to travel, diversify and acquire new customers in newer markets are the need of the hour. “You have to give smaller entrepreneurs funds to travel and source business. Some of our schemes reimburse costs after an exporter has finished exporting goods,” Ahmed said.
At the state level, delays in value added tax reimbursements to exporters are a big area of concern, Ahmed said. “At times it seems as though the states do not care about exporters. In some cases, refunds are pending for two or three years,” he said.
The government is expected to come out with a second package to boost exports. The commerce ministry had announced a Rs. 1,600 crore package in June, when it also rolled out an interest credit scheme for a list of export goods. “The interest subvention scheme could be extended to a few more sectors,” Ahmed said.